TCS tumbles after Q2 results

The IT major's consolidated net profit rose 6.84% to Rs 9,624 crore on 3.21% increase in net sales to Rs 46,867 crore in Q2 September 2021 (Q2 FY22) over Q1 June 2021 (Q1 FY22).

On a year-on-year (YoY) basis, the IT major's net profit rose 28.75% and net sales rose 16.77% in Q2 FY22.

Constant currency revenue grew 15.5% YoY. Operating margin fell 0.6% YoY and it rose 0.1% quarter-on-quarter (QoQ) to 25.6% in Q2 FY22.

Profit before tax rose 6.63% to Rs 12,969 crore in Q2 FY22 as against Rs 12,163 crore in Q1 FY22. Net cash from operations was at Rs 9,945 crore i.e. 103.3% of net income during the quarter.

All verticals showed strong, double-digit YoY growth. Growth was led by the manufacturing vertical (+21.7%), followed by life sciences and healthcare (+19%), retail and CPG (+18.4%) and BFSI (+17%). Communications & media (+15.6%) and technology & services (+14.8%) witnessed accelerated growth.

All major markets showed strong growth, with growth led by North America (+17.4%). UK grew (+15.6%), and Continental Europe grew (+13.5%). Among emerging markets, growth was led by India (+20.1%), followed by Latin America (+15.2%), Middle East & Africa (+13.8%) and Asia Pacific (+7.6%).

Q2 saw strong demand for growth and transformation services as customers took a longer-term view of their businesses, driven by improving vaccination levels and business outlook. There was broad-based growth across services led bycloud, enterprise application services, analytics and IoT, the IT major said in a release.

Th company added 5 new clients (total: 54) in $100 million+ category and 17 new clients (total: 114) in $50 million+ category.

TCS added 19,690 employees on a net basis in Q2, taking the total employee base to 528,748 as of 30 September 2021. IT services attrition rate (LTM) was at 11.9%, the lowest in the industry.

The board declared a second interim dividend of Rs 7 per share. The record date is fixed on 19 October 2021.

Rajesh Gopinathan, chief executive officer and managing director, said: "The strong and sustained demand environment is a once-in-a-decade opportunity to position ourselves as the preferred growth and transformation partner for our customers. We are using the growth tailwind to invest in strengthening relevant capabilities and building out a comprehensive portfolio of offerings that caters to a broader set of stakeholders in the enterprise across business cycles, strengthening our brand, and making our business more resilient. We believe this is the most sustainable pathway to create longer term value for all our stakeholders."

Samir Seksaria, chief financial officer, said: "Strong growth and disciplined execution helped us overcome headwinds from currency and supply-side inflation and deliver expanded margins. Our industry-leading profitability and strong cash conversion give us the wherewithal to make the right investments needed to build out the business of the future."

TCS is an IT services, consulting and business solutions. Following the Q2 results, shares of TCS slumped 5.5% to Rs 3718.70.

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