TCS Q2 net falls 2.1% YoY on softness in banking, retail

TCS Q2 net falls 2.1% YoY on softness in banking, retail

During the quarter, TCS saw its IT attrition rate come down by 0.3% sequentially to 11.3 per cent.

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.

In April past year, TCS received an unfavourable jury verdict awarding damages totalling Rs 6,145 crore (USD 940 million) to Epic.

The company's blue chip stock of Re 1 face value closed on the BSE at Rs 2,548.55 per share, gaining Rs 48.05 over Wednesday's closing price of Rs 2,500.50 after opening at Rs 2,501.05 and touching a high of Rs 2,555 during intra-trading earlier in the day.

CEO and managing director Rajesh Gopinathan noted that the volume increase had been driven by demand across multiple industry verticals. Strong, broadbased client metrics this quarter demonstrates our increasing success with newer customers. "Large deal wins this quarter, a good pipeline, and bottom-ing out of the retail sector softness positions us well", Gopinathan said.

India's top IT services firm Tata Consultancy Services Ltd (TCS) said it expected an uptick in the retail business segment in the coming quarters but remained cautious about the banking and financial services segments that form the bulk of its revenues.

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"We continue to gain share in the fast growing Digital spend of our customers, evident in our industry-leading Digital growth in Q2".

With the exception of retail and communication & Media industries (CMI), all industry verticals grew above the company average led by travel & hospitality (up 8 per cent QoQ), energy & utilities (up 7.2 per cent) and life sciences and health care (up 3.6 per cent).

The first large Indian information technology (IT) service provider to declare quarterly numbers, TCS expects business to grow across sectors while awaiting recovery in investments from clients in banking and financial services and retail later this year.Wipro, its smaller rival, will announce quarterly numbers on October 17, while Infosys, with its co-founder Nandan Nilekani back at the helm, will declare its numbers on October 24.

"EBIT (earnings before interest and tax) margins improved by 170 bps q-o-q at 25.1% well ahead of our estimates of 24%".

TCS said growth was led by Europe (up 5.3 per cent Q-o-Q), Latin America (up 5.7 per cent Q-o-Q), APAC (up 3 per cent Q-o-Q) and United Kingdom (up 2.5 per cent Q-o-Q). The US, its largest market saw growth of 1.4 per cent, as it saw continued softness in business from banking and retail customers.

"Our investment programme remains geared for growth".

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