Tata Consultancy Services reports slip in Q2 profit

Tata Consultancy Services reports slip in Q2 profit

TCS, India's biggest IT services outsourcer, today reported a better-than-expected 8.4 per cent sequential jump in its net profit for the July-September quarter to Rs 6,446 crore on the back of good demand across multiple industry verticals.

"With 93 per cent of revenue from exports, including 53 per cent from the USA, 27 per cent from Europe and Britain and 13 per cent from rest of the world, our performance in dollar terms was robust in the July-September quarter", a TCS official told IANS here.

A return to stronger growth at TCS, the crown jewel of the Tata Group, is welcome news to Executive Chairman N Chandrasekaran, who was previously the CEO of TCS before being elevated to his current role. Brokerage IDBI had forecast TCS' revenue to grow 3.2% at Rs 30,534 crore, while HDFC Securities had forecast a 3.5% to 3.6% growth QoQ.

Analysts on average had expected a profit of 63.06 billion rupees, Thomson Reuters data showed. TCS's digital services revenue stood at 16.7 percent of the total for the previous fiscal year that ended March 31, 2017. Operating Margin at 25.1%, an expansion of 1.7% q-o-q. Analysts said the numbers are positive, despite lack of growth from retail and incomplete recovery in technology spending from banking clients."The company's numbers have been relatively better and it has seen an operational outperformance".

Attrition went down further to 11.3 per cent.

Sales in dollar terms, the currency in which India's IT sector earns much of its revenue, rose 3.2 percent to $4,739 million from $4,591 million for the June quarter.

"In retail we're seeing a significant amount of traction". Strong, broadbased client metrics this quarter demonstrates our Increasing success with newer customers.

Gopinathan said the softness in the retail business is slowly "bottoming" out.

While outsourcing for legacy services grew marginally by 1.4 per cent, almost 44 per cent of the global contracts were in digital or deals that had vendors deliver product or solutions as a service.TCS said it won one client with $100 million, while six clients each in the band of $50 million, $20 million, and $10 million.

TCS has declared a whopping 700 per cent second interim dividend of Rs 7 per share of Re 1 face value. Rajesh Gopinathan said that the digital services of the company grew more than 30% YoY.

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