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TCS Q2 results comes largely in line with expectations

Tata Consultancy Services Ltd, the country’s largest IT services exporter, reported revenue largely in line with expectations, while net profit fell slightly.

Revenue was 30,541 cr, up 4.3% on year. Dollar and constant currency numbers have not yet been revealed.

Operating margin was 25.1%, up 1.7%, but still below historical averages.

Net profit was up 8.4% at 6,446 cr, but was down by 2.1% on year.

“Rigor and discipline in our operations helped accomplish an impressive margin performance and progress along the profitability path we had outlined earlier. Our investment program remains geared for growth,” said V. Ramakrishnan, Chief Financial Officer.

The company saw a net addition of 3,404 employees to its total headcount. A total of 12,464 employees left the company, either voluntarily or involuntarily.

The TCS stock has risen 2.5% in the last five trading days.

Commenting on the O2 performance, Rajesh Gopinathan, CEO and MD, said: “We experienced robust volume growth in O2, driven by good demand across multiple industry verticals. Strong, broadbased client metrics this quarter demonstrates our increasing success with newer customers. Large deal wins this quarter, a good pipeline, and bottoming out of the Retail sector softness positions us well.”

Gopinathan added: “We continue to gain share in the fast growing Digital spend of our customers, evident in our industry-leading Digital growth in O2. By sharpening our focus on individual components of the Digital service stack, we have been able to bring to bear the full power of our contextual knowledge, research and innovation, and investments in location-independent agile, automation and cloud on our customers’ transformational imperatives and become a trusted partner in their Business 4.0 journeys.”

N. Ganapathy Subramanlam, Chief Operating Officer & Executive Director, said the company focused on balancing growth and margins.

“Our client-centricity and business depth are resulting in industry-leading customersatisfaction levels and strong client metrics. With the sectoral headwinds slowly abating, we expect steadier and stronger growth ahead.”

REVENUE BREAK UP

With the exception of Retail and CMI, all industry verticals grew above the company average, led by Travel & Hospitality (up 8% O-o-O), Energy & Utilities (up 7.2% O-o-O) and Life Sciences & Healthcare (up 3.6% O-o-Q). On a year on year basis, all industry verticals – with the exception of BFS and Retailgrew above 9.5%.

Growth was led by Europe (up 5.3% on quarter), Latin America (up 5.7% on quarter), APAC (up 3%) and UK (up 2.5%). North America grew by 1.4% O-o-O with continued softness in Banking and Retail.

Consulting & Service integration: Newly launched strategic offerings saw more than 10 major wins in Q2 across Enterprise Agility, M&A, Global Shared Services, Supply Chain and Front Office Customer Experience Transformations, the company said.

loT: The practice saw double digit quarterly growth as the mainstreaming of loT deployments gathered steam, with several wins in this quarter including a Digital Twin and Al-based remote monitoring and optimization solution for a Japanese heavy industrial equipment manufacturer, TCS said.

Enterprise Application Services too experienced robust growth in Q2, driven by transformational wins around newer Cloud Platforms from SAP, Oracle, Salesforce, Microsoft & others, it added.

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