TCS Q2 PAT at Rs 6,055 crore; revenue reported at Rs 27,165 crore

MUMBAI: Tata Consultancy Services, India’s largest IT services company, reported 3% sequential revenue growth in the second-quarter, missing analysts’ expectations and falling far short of the high-bar set by rival Infosys.

For the quarter ended September 30, TCS’ revenue grew 3% to $4.2 billion. Net profit rose 3.2% sequentially to $926 million.

TCS reported an operating margin of 27.1%, an improvement of 78 basis points sequentially.

The Board of Directors of the Company declared a second interim dividend of Rs. 5.50 per equity share of Rs. 1 each of the company. The IT major said that it has fixed October 26, 2015 as the record date for the purpose of payment of second interim dividend, which will be paid out on October 30, 2015.

Analysts on average had expected Mumbai-headquartered TCS to report revenue growth of between 3.6% in the quarter. Infosys reported sequential revenue of 6% in the first quarter, helped by a one-time gain. Excluding the gain, Infosys would still have reported revenue growth of 5%.

The rivalry between TCS and Infosys is getting increasingly fierce. Infosys used to be the industry bellwether, but internal turbulence led to it losing that title to TCS in the aftermath of the global financial crisis.
Since Vishal Sikka took over the helm of the Bengaluru-based firm, growth at Infy has rebounded, while TCS has struggled to overcome the effect of its much larger base. Sikka has said he expects Infosys will get back to industry-leading growth in the next financial year.

The lacklustre growth will make it harder for TCS to meet its aspiration of growing above the industry.

TCS’ results are being closely watched after Infosys lowered its dollar revenue guidance for the year, despite stellar performance in the second quarter, signalling tough times in the back half of the financial year for Indian IT companies.

Infosys’ outlook also reflected trends seen at larger rival Accenture, which also beat expectations in its fourth fiscal quarter ended in August, but forecast lower-than-anticipated growth for the year ahead.

Earlier in June, technology researcher Gartner gave a gloomy outlook for worldwide technology spending and said it expected global tech spending to drop 5.5% in 2015.

Industry lobby Nasscom has also raised concerns about slower growth in the sector and pegged software export revenues to grow 12-14% in FY16, down from 13-15% in FY15.