TCS Q2 net down 2.1% to Rs 6446 cr

TCS Q2 net down 2.1% to Rs 6446 cr

The company, which is the crown jewel of the United States dollars 104 billion salt-to-software Tata Group, declared a dividend of Rs 7 per share and set October 26 as the record date. Bloomberg consensus estimates had forecast the IT major's net profit at Rs 6,287 crore on revenues of Rs 30,508 crore. Net profit for the second quarter, ended September 30, rose 8.3% to touch $1billion.

Commenting on Q2 earnings, CEO and managing director Rajesh Gopinathan said: "We experienced robust volume growth in Q2, driven by good demand across multiple industry verticals".

TCS posted a net profit of 64.46 billion rupees ($990 million) in the three months to September 30, beating analysts' average estimate of 63.06 billion rupees, Thomson Reuters data showed.

"Large deal wins this quarter, a good pipeline and bottoming out of the retail sector softness position us well", chief executive Rajesh Gopinathan said on Thursday.Europe grew sequentially in constant currency by 5.3%, United Kingdom by 2.5% and Latin America by 5.7%. On an year on year basis, the company said all industry verticals with the exception of BFSI and retail grew above 9.5 per cent. The company said its digital services or new-age technologies contributed 19.7 per cent to its total revenue in Q2, a sequential growth of 5.9 per cent and 31 per cent annually.

The results of TCS, the first to report quarterly earnings among Indian software exporters, augur well for the nation's information technology sector amid concerns companies could report muted financial performance in the second quarter because of a slowdown in the US financial services and retail industries. "With the sectoral headwinds slowly abating, we expect steadier and stronger growth ahead". North America, which contributes the lion's share of the revenue, was up by just 1.4%, hurt by sluggish growth in the banking and retail sectors.

Operating margin of TCS was up by 170 basis points to 25.1%, of which 50 basis points came from currency changes and the rest from operational efficiencies and savings. TCS shares have returned a respectable 7% since january, at a time when the BSE IT Index has given abysmal 1.4% in the same period.