TCS slides as Q2 revenue growth disappoints

TCS lost 3.98% to Rs 2,494 at 13:52 IST on BSE after the company's revenue growth in Q2 September 2015 missed market expectations.

Meanwhile, the S&P BSE Sensex was down 17.23 points or 0.06% at 26,829.30

On BSE, so far 2.93 lakh shares were traded in the counter as against average daily volume of 52,017 shares in the past one quarter.

The stock hit a high of Rs 2,550 and a low of Rs 2,483.05 so far during the day. The stock had hit a 52-week high of Rs 2,810 on 4 March 2015. The stock had hit a 52-week low of Rs 2,348.25 on 16 December 2014.

The stock had underperformed the market over the past one month till 12 October 2015, rising 2.04% compared with 5.05% rise in the Sensex. The scrip had, however, outperformed the market in past one quarter, rising 3.54% as against Sensex's 2.74% decline.

The large-cap IT services provider has equity capital of Rs 195.87 crore. Face value per share is Re 1.

TCS' consolidated net profit rose 6.5% to Rs 6085 crore 5.8% growth in revenue to Rs 27165 crore in Q2 September 2015 over Q1 June 2015. The company's Q2 revenue growth missed expectations. The result was announced after market hours yesterday, 13 October 2015.

The company's top management indicated at a post Q2 result conference call that the company continues to face issues in its UK based business process outsourcing subsidiary Diligenta and in the Japan region (on account of the ITS integration) and expects it to continue over the next two quarters at least. TCS has been citing stress in three areas - Diligenta, Japan and Latin America. These areas have drawn overall performance lower despite strong growth in other areas. In September 2015 quarter, the situation in Latin America saw stabilization, as revenue from this geography grew by 6.2% on sequential basis in constant currency terms.

Similar to the trend seen in the previous years, Q3 December 2015 is expected to be weak on account of fewer working days and furloughs, TCS said. The extent of the impact of furloughs however, will only be known fully by mid-November, the company said.

TCS' operating profit rose 8.7% to Rs 7307 crore in Q2 September 2015 over Q1 June 2015. The growth was broad based in Q2 with all industries growing on a sequential basis led by banking & financial services (BFS), retail, life sciences and travel & hospitality. Core markets like UK, North America, and Europe grew smartly along with emerging markets like Latin America, Indian and Middle East and Africa (MEA). There was balanced growth across service lines led by asset leveraged solutions. The customers with deals of $100 million and above rose by 3 and $10 million and above customers rose by 6 in Q2 September 2015.

N. Chandrasekaran, Chief Executive Officer and Managing Director, TCS said that driven by great execution on the ground, the company's broad-based performance has been led by strong sequential growth in banking and financial services, retail and life sciences verticals with the UK and North America leading the markets.

TCS has declared a second interim dividend of Rs 5.50 per share for the year ending 31 March 2016 (FY 2016).

TCS is one of the leading IT services, consulting and business solutions organization. The company offers a consulting-led, integrated portfolio of IT, BPS, infrastructure, engineering and assurance services.

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