TCS Q2 net up 1.8% at Rs 8,042 cr, to pay special dividend of Rs 40/share

Global IT services provider Tata Consultancy Services (TCS) reported a 1.8% year-on-year increase in consolidated net profit at Rs 8,042 crore for the second quarter ended September 30, 2019.

Revenue stood at Rs 38,977 crore, an increase of 5.8% compared to the previous year. 

It is to be noted that the July-September period has historically been a good performing period for Indian companies, However, the reported operating margin of 24% was still below the estimates of analysts. 

TCS also declared that it would be paying Rs 40 as a special dividend per share. 

Some of the key highlights include digital revenue increasing by 27.9% year-on-year while life sciences and communications increasing by 16% and 11.8%, respectively, compared to the same period in 2018. 

“We remain confident as the medium and longer-term demand for our services continues to be very strong as evidenced by our Q2 order book – the highest in the last six quarters,” said Rajesh Gopinathan, CEO and MD, TCS. 

Gopinathan also said the digital disruption across multiple industries had led to rapid and scalable innovation that would be crucial for growth in a business 4.0 world.  “Our strategic partnership with General Motors for their next-generation mobility initiatives is a powerful illustration of this,” he added.

While the BFSI segment reported a growth of 8%, manufacturing was up 7.8%, technology and services by 5.6% and retail by 4.8%.

While a chunk of the growth was led by Europe and the UK at 16% and 13.3%, North America grew the least at 5.3% with India and Latin America staying steady at 7.7% and 7.3%,  respectively. 

Strategic offerings around enterprise agility, mergers, acquisitions and divestitures as well as supply chain as a service saw increased traction in Q2.

TCS attributed the growth to the strong demand for hybrid cloud transformation and digital customer experience services. Secure hybrid cloud, along with AI and Machine learning, played a crucial role in sustainable business operations. 

In terms of innovation, the company had applied for 192 new patents during the quarter, while 14,09 employees were added to the organisation, the largest addition in a single quarter. The attrition rate stood at 11.6%.