TCS Q2 PAT down 7% YoY at Rs 7,475 cr; announces Rs 16,000 crore buyback

Tata Consultancy Services (TCS) on Wednesday reported a 7 per cent year-on-year (YoY) fall in its net profit or profit after tax (PAT) at Rs 7,475 crore for the quarter ended September 30, 2020 (Q2FY21). The information technology (IT) major had reported a profit of Rs 8,042 crore in the corresponding quarter of the previous fiscal.

On a sequential basis, however, the company's profit grew 6.6 per cent.

The company's revenue came in at Rs 40,135 crore, up 2.9 per cent YoY and 4.7 per cent on a quarter-on-quarter (QoQ) basis. In constant currency, TCS' revenue grew 4.8 per cent QoQ. In US dollar terms, revenue grew 7.2 per cent QoQ to $5.424 billion. On YoY basis, revenue slipped 1.7 per cent. 

Further, the company also announced Rs 16,000 crore buyback at Rs 3,000 per equity share. "The Board has approved a proposal to buy back up to 5,33,33,333 equity shares of TCS, being 1.42 per cent of the total paid up equity share capital, at Rs 3,000 per equity share," the company said in its press release. 

That apart, TCS also declared a second interim dividend of Rs 12 per equity share of Re 1 each. 

The company's operating margin expanded 2.2 per cent YoY to 26.2 per cent, the company said. The total contract value (TCV) during the period stood at $8.6 billion.

Analysts at global brokerage firm HSBC had estimated TCS' revenue in US dollar terms at $5,236 million, up 3.5 per cent QoQ but down 5.1 per cent YoY. In rupee terms, the company was expected to post a 2.1 per cent QoQ rise in revenue at Rs 39,113.4 crore. CLICK HERE TO READ WHAT ANALYSTS HAD ESTIMATED

"Driving accelerated business value realisation of our customers' digital investments has resulted in broad-based revenue growth. The strong order book, a very robust deal pipeline, and continued market share gains give us confidence for the future," said Rajesh Gopinathan, Chief Executive Officer and Managing Director. 

He added: "What we are witnessing right now is the start of the first phase of a multi-year technology transformation cycle. In the current phase, enterprises are building a cloud-based foundation that will serve as a resilient, secure and scalable digital core. In subsequent phases, we will see the native capabilities of these platforms being utilized to create innovative new business models and differentiated customer experiences. Our investments in building deep expertise on these platforms, in research and innovation and in industry-specific solutions leveraging our contextual knowledge, position us very strongly to benefit fully from this secular demand driver."

Q2 Segment Highlights

TCS announced that BFSI (up 6.2 per cent), Retail and CPG (up 8.8 per cent) and Life Sciences and Healthcare (up 6.9 per cent) led the revenue growth of the company during the quarter. Technology & Services grew 3.1 per cent, Manufacturing grew 1.4 per cent while Communications & Media segment de-grew by 2.4 per cent.

Geography-wise, all markets, TCS said, showed good sequential growth, with North America growing 3.6 per cent, UK growing 3.8 per cent, and Continental Europe 6.1 per cent. "Emerging markets also grew well, with India growing 20 per cent, Middle East Africa (MEA) 8 per cent, Latin America 5.5 per cent and Asia Pacific was up 2.9 per cent.

Among other highlights, TCS' consolidated headcount during the quarter under review stood at 4,53,540. The IT Services attrition rate hit an all-time low at 8.9 per cent LTM (last twelve months).