TCS Q2 net profit up 1.8% to ₹8,042 cr
BENGALURU: Tata Consultancy Services (TCS) Ltd reported a lower-than-expected September quarter profit on Thursday, as India’s number one information technology (IT) services exporter battled sluggish spending by financial clients.
TCS, a part of salt-to-software conglomerate Tata group, heavily relies on banking clients in the West for revenue like its peers in the $180-billion IT services sector.
However, an escalating trade war between the US and China, as well as Britain’s likely chaotic exit from the European Union have throttled global economic growth and many companies are cutting costs to cope with the slowdown.
TCS’ net profit rose 1.8% to ₹8,042 crore ($1.13 billion) in the three months ended September 30 from a year ago, but missed the average analyst estimate of ₹8,255 crore, according to Refinitiv data.
Operating margins dropped to 24% from 26.5%.
The company—whose clients include the Netherlands-based ABN Amro Bank, Citigroup UK and Norway’s DNB—said revenue in its key banking, financial services and insurance (BFSI) segment rose only 5.3% to ₹15,427 crore. Total revenue rose 5.8% to ₹38,977 crore.
TCS also said its Board has declared a second interim dividend of ₹5 and a special dividend of ₹40 per equity share of ₹1 each of the company. “We ended the quarter with steady growth despite increased volatility in the financial services and retail verticals. We remain confident as the medium and longer term demand for our services continues to be very strong, as evidenced by our Q2 order book— the highest in the last six quarters,” TCS chief executive and managing director Rajesh Gopinathan said.
Shares of the company ended down 0.77%.