Riding high on strong volumes, rupee depreciation and rigorous execution of orders, Tata Consultancy Services Ltd (TCS), India’s largest company by market value, has reported a 33.9 per cent growth in second-quarter profit.
Beating market estimates and Infosys’ earning growth, net profit of the tech firm shot up to Rs 4,701.8 crore from Rs 3,512.3 crore in the same period of last year. The profit has gone up by 23.9 per cent on a quarter-on-quarter basis. Revenue rose to Rs 20,977 crore, showing a rise of 34.3 per cent from September 2012.
TCS MD and CEO, N Chandrasekaran, said: “It has been another great quarter. We have demonstrated all-round strong growth across markets and industries, highlighted by efficient and rigorous execution. Our ongoing investments in industry-led solutions and our efforts to provide insights and articulate the relevance of the digital revolution to business is helping us gain mindshare with customers and differentiate the TCS brand in the market.”
TCS shares gained 0.18 per cent at Rs 2,218.15 on the BSE on Tuesday. “TCS results beat expectations on revenues as well as margins. The 7.3 per cent volume growth was significantly above expectations and also much above the growth reported by Infosys,” said Dipen Shah, head of Private Client Group Research, Kotak Securities.
“TCS has been better-off on the utilisation front. The onsite revenue for TCS is high, which is a big positive. We expect that not just this quarter but the next two quarters, TCS’ profit will grow more than 25-30 per cent. The outperformance was led by the rupee’s depreciation and a recovery in the operating environment following an improvement in the USA and the euro zone,” said Rikesh Parikh, V-P - Institution Corporate Broking, Motilal Oswal Securities.
Rajesh Gopinathan, chief financial officer, said: “Strong volumes, currency tailwinds and firm execution helped us post industry-leading operating margins in this quarter.” While the operating margin was at 30.2 per cent, the gross employee addition during the quarter was 17,362. The growth in Q2 was broad-based with all industries contributing to this holistic performance, TCS said.