Top six takeaways from TCS Q2 results for investors

NEW DELHI: Tata Consultancy Services (TCS) reported 4.3 per cent quarter-on-quarter (QoQ) growth in the net profit to Rs 6,586 crore and 8.8 per cent growth on a year-on-year (YoY) basis for the quarter ended September 30.

Shares of Tata Consultancy Services (TCS) dropped over 2 per cent on Thursday ahead of its second quarter earnings scheduled later for the day. The stock ended down by 2.17 per cent at Rs 2,328.50 on BSE.

"It has been an 'unusual Q2' for TCS. Growing uncertainties in the environment is creating caution among customers and resulted in holdbacks in discretionary spending this quarter," N Chandrasekaran, CEO & MD of TCS said in the release.

"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," he said.

Although TCS Q2 was largely in-line with estimates, ETMarkets.com collated top six key takeaways for investors. The numbers are in accordance with IFRS & Ind AS as on September 30.

Revenue rose 7.8% YoY: Revenues grew 7.8 per cent on a year-on-year basis, but remained flat (0.1 per cent) on a quarter-on-quarter (QoQ) basis for the three-month period ended September 30.

While operating income grew by 3.6 per cent on a YoY basis to Rs 7617 crore and on QoQ basis, it grew by 3.7 per cent.

Dividend: Tata Consultancy Services has informed BSE that the Board of Directors of the company at its meeting declared a second interim dividend of Rs 6.50 per equity share of Re 1 each of the company. TCS has fixed October 25, 2016, as the record date for the purpose of payment.

Business growth: During September quarter, growth was led by Life Sciences and Healthcare verticals, which grew by 4.7 per cent sequentially in constant currency followed by Energy and Utilities, which rose 3.6 per cent.

Other verticals such as Manufacturing grew by 3.1 per cent, Travel & Hospitality saw a growth of 2.3 per cent and Communication & Media grew by 2 per cent sequentially for the quarter ended September 30.

Dollar Revenue: For the quarter ended September 30, TCS' revenue rose 1% sequentially in constant currency to $4.37 billion, up from Net profit rose 4.7% to $984 million. During the quarter, its constant currency revenue was up sequentially by 1 per cent.

Geographical Growth: For the quarter, Europe saw a growth of 3.7 per cent and Asia Pacific at 3.5 per cent sequentially in constant currency terms. North America grew by 1.4 per cent sequentially while the UK remained flat.

India business declined by 7.6 per cent sequentially and Latin America also continued to show volatility.

Attrition Rate: 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 3,71,519. Total gross additions as reported by the company for the quarter ended September 30, stands at 22,665 employees.