TCS’ Profit Beats Estimates, But Dollar Revenue And Volume Growth Disappoint
The net profit for the quarter rose to Rs 6,586 from Rs 6,317 crore on QoQ basis.
Tata Consultancy Services Ltd. posted a 4.3 percent growth in profit for the second quarter of financial year 2016-17, beating street estimates, even as the topline disappointed.
The information technology giant's net profit for the July-September quarter rose to Rs 6,586 crore from Rs 6,317 crore in the previous quarter, it said in a press release. The consensus of analyst estimates tracked by Bloomberg stood at Rs 6,296 crore.
Revenue declined 0.1 percent to Rs 29,284 crore from Rs 29,305 crore in the April to June quarter. The Bloomberg consensus estimate stood at Rs 29,740 crore.
The dollar revenue grew 0.3 percent sequentially to $4.37 billion from $4.36 billion. The performance trailed Bloomberg consensus estimate of $4.47 billion.
Volume growth also disappointed, slowing to 1.3 percent compared to 3.4 percent in the previous quarter.
Margin Picture
Earnings before interest and taxes increased 3.7 percent to Rs 7,617 crore from Rs 7,347 crore quarter-on-quarter.
TCS’ operating margins improved 130 basis points on the back of better operational efficiencies, while currency headwinds reduced margins by 40 basis points. Overall, the company’s operating margin expanded 90 basis points to 26 percent.
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Segment-Wise Break-Up
Revenue from banking and financial services, which contributes the most to TCS’ earnings, fell 0.1 percent to Rs 11,821 crore.
Life sciences and healthcare was the best performing segment, with 4.7 percent revenue growth. Energy and utilities division revenue grew 3.6 percent while manufacturing segment revenue rose 3.1 percent.
Geographical Break-Up
Revenue from India declined 7.6 percent on a sequential basis, while revenue from North America grew 1.4 percent. Europe and Asia Pacific regions outperformed with 3.7 percent and 3.5 percent revenue growth respectively.
Attrition rate dropped to 11.9 percent on the last twelve month basis, with a gross addition of 22,665 employees in the quarter.
The company has announced a dividend of Rs 6.5 per equity share of Rs 1 each.
Shares of TCS fell 2.2 percent to close at Rs 2,328.90 before the earnings were announced, compared with 1.6 percent decline in the Sensex. TCS is the first of the major IT companies to report earnings, with Infosys results due on Friday.