TCS Q2 profit falls 2.1%

In­crease in costs, slug­gish­ness in BFSI and re­tail busi­nesses af­fect per­for­mance

The Hindu Business Line - - FRONT PAGE -

In­dia’s largest soft­ware ser­vices ex­porter, TCS, re­ported a 2.1 per cent de­cline in its sec­ond-quar­ter profit to ₹6,446 crore from ₹6,586 crore in the same pe­riod last year due to higher costs and slug­gish­ness in the BFSI and re­tail busi­nesses.

Rev­enue rose 4.3 per cent to ₹30,541 crore from ₹29,284 crore last year.

Dig­i­tal rev­enues con­tin­ued to in­crease and ac­counted for 19.7 per cent of TCS’ over­all rev­enues for the quar­ter. On a year-on-year ba­sis, dig­i­tal rev­enues grew 31 per cent, the com­pany said.

“We con­tinue to gain share in the fast-grow­ing dig­i­tal spend of our cus­tomers, ev­i­dent in our in­dus­try-lead­ing dig­i­tal growth in Q2,” said Ra­jesh Gopinathan, CEO and MD.

Gopinath said that while the size of dig­i­tal deals still con­tin­ues to be quite small, the com­pany is get­ting into cer­tain larger dig­i­tal trans­for­ma­tion deals. “We are close to an­nounc­ing a $50 mil­lion kind of deal in the IoT space. We are get­ting into deals that are sub­stan­tial,” he said.

Mar­gins, at 25.1 per cent, are still be­low the com­pany’s stated tar­get band of 26-28 per cent. In the same quar­ter last year, mar­gins stood at 26 per cent.

Rev­enue from North Amer­ica, which makes up 54 per cent of the to­tal, in­creased 3.6 per cent year-on-year in con­stant cur­rency terms.

With the ex­cep­tion of BFSI and re­tail, all in­dus­tries grew above 9.5 per cent in the quar­ter ver­sus the same quar­ter last year. North Amer­ica grew 1.4 per cent Q-o-Q with con­tin­ued soft­ness in bank­ing and re­tail, the com­pany said.

Gopinath played down the slug­gish­ness in re­tail and the bank­ing, fi­nan­cial ser­vices and in­sur­ance (BFSI) sec­tors say­ing that there is over­all op­ti­mism and a turn­around in at least the re­tail sec­tor is ex­pected in the next cou­ple of quar­ters.

He said the fear of fin­tech has fi­nally passed and that banks are look­ing to in­crease spends on IT, which could mean in­creased rev­enue for TCS.

TCS added one new client in the $100 mil­lion plus band, while six clients each were added in the $50 mil­lion, $20 mil­lion and $10 mil­lion bands.

Dur­ing the quar­ter, TCS saw its at­tri­tion rate come down 0.3 per cent se­quen­tially to 11.3 per cent. It added 15,868 em­ploy­ees (gross) and 3,404 (net) in the Septem­ber 2017 quar­ter, tak­ing the to­tal head­count to 389,213 peo­ple. The com­pany re­cruited 3,725 em­ploy­ees out­side In­dia, bring­ing the to­tal to 6,979 in the first half of the fis­cal year. Also read

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