Allaying fears of a double-dip recession in the US and its impact on the IT sector, Tata Consultancy Services (TCS) reported a net profit of Rs 2,169 crore in the second quarter ended September 2010, up 32%, against Rs 1,642 crore during the corresponding quarter last year. In dollar terms, the firm reported its highest ever sequential growth of 30.3% in its top line, touching the $200-million mark. In rupee terms, revenues stood at Rs 9,286 crore, up 25%, as compared to Rs 7,435 crore during the corresponding quarter last year. Operating margins were at historic high at 28%, up 167 bps y-o-y basis. For the half year ended September 30, 2010, TCS recorded a net profit of Rs 4,075 crore, up 28.3% from Rs 3,176 crore in the same period last year.
The board declares second interim dividend of Rs 2. Chandrasekaran, MD & CEO said, ?We have seen double-digit growth and significant deal flows across verticals and geographies. We expect the demand to be robust in the coming quarters. However, we would take a cautious approach to the macro-economic conditions and keep a watch on them.? Chandrashekaran added that the discretionary spending was back and the firm was witnessing large deal flows that are above $50 million. ?We are actively chasing 11 large deals spread across geographies and verticals. At the same time, Europe that has grown this quarter is lacking behind in recovery as compared to other markets.?
The firm reported a volume growth of 11.2% during the quarter and forex gain of Rs 47 crore. S Mahalingam, CFO, TCS said, ?The margin growth is sustainable if the currency movements are favourable. This quarter, we had a positive impact on the margin by 1.3% due to forex gains, 95 bps due to increase in productivity, 54 bps due to increase in SgnA efficiency, while increase in payroll on the back of promotions gave a negative impact of 1.66% on the margins.?
TCS results comes a few days after Infosys Technologies posted a y-o-y 13.2% rise in its Q2 profit, taking it to Rs 1,737 crore for the quarter.
“TCS has scaled a new high and is setting the agenda in the Indian IT Services space. A 11.2% Q-o-Q volume growth (highest since Jun-05 quarter) further validates the strength of the demand recovery and a 86bps Q-o-Q margin improvement indicates TCS’ continued progress on the cost-containment front. We believe revenues will continue to surprise on the upside for leading Indian IT vendors through FY11, even as costs are kept under control,? said, Nimish Joshi, analyst at CLSA in a note.
Revenues from North America crossed $ 1 billion, a growth of above 10%, contributing 52.5% to the overall revenues while Europe and UK grew about 20% and contributed 27% to the overall revenues. Revenues from India grew by 15%. TCS also signed eight contracts during the quarter. TCS results came in after market hours. During the quarter the firm had a net addition of 10,717 employees with gross addition of 19,293. The firm has upgraded its gross hiring target for the company.