TCS reports 4.5% jump in Q2 net profit

NEW DELHI: IT major Tata Consultancy Services ( TCS) on Thursday reported a profit after tax (PAT) of Rs 6,603 crore for the September quarter.

This was 4.51 per cent QoQ higher than June quarter PAT of Rs 6318 crore the firm reported in June quarter.

N Chandrasekaran, CEO & MD of TCS, said that Q2FY17 was an 'unusual' quarter for the firm as growing uncertainties in the environment were creating caution among customers, which resulted in holdbacks in discretionary spending.

The company added one new client in $50 million-plus category and six others in $20 million-plus category.

TCS had, in September, informed BSE that the customer outlook was characterised by abundant caution. It had warned of holding back of discretionary spending, particularly in the BFSI vertical in the US, resulting in some sequential loss of momentum.

The largest IT firm by revenues on Thursday said its net sales for the quarter stood at Rs 29,284 crore, down 0.1 per cent QoQ from Rs 29,305 crore sales it reported in June quarter.
In dollar terms, TCS’ revenue rose 1 per cent sequentially in constant currency to $4.37 billion, up from Net profit rose 4.7 per cent to $984 million

Ebitda margins for the quarter expanded to 26 per cent in Q2FY17 against 25.1 per cent in Q1FY17.

“Volatility in markets like India and Latin America also muted revenue growth. It has been a good quarter from a profitability perspective where despite multiple headwinds our disciplined approach and focus on operations has helped us deliver a strong margin performance,” Chandrasekaran said.

TCS’ attrition rate fell to 12.9 per cent from 13.6 per cent in the first quarter of the year. The company ended the quarter with a headcount of 371,519.

TCS said its digital revenue grew to 16.1% in Q2, up from 15.9% in the first quarter.

The company announced dividend of Rs 6.50 apiece.

TCS stock declined 2.17 per cent to settle at Rs 2,328.50 on BSE on Thursday.

TCS’ results will be used as a gauge of how the rest of the Indian IT sector will perform. Analysts have said that the Top 5 Indian IT companies will report the worst second quarter in a decade as they grapple with pricing pressure and the outcome of Britain voting to leave the European Union.

(With inputs from Jochelle Mendonca, ET Bureau)