TCS Q2 score­card does not lend much com­fort

Weak­ness per­sists in BFSI and re­tail seg­ments

The Hindu Business Line - - IT & TELECOM - RAJALAKSHMI NIR­MAL

TCS re­ported a 1.7 per cent growth in rev­enue in con­stant cur­rency terms, quar­ter-on­quar­ter, which is a tad lower than mar­ket ex­pec­ta­tions.

On year-on-year ba­sis, the growth was 7.1 per cent, which is an im­prove­ment from 6.3 per cent in the June quar­ter.

How­ever, the key ver­ti­cals and ge­ogra­phies haven’t shown any turn­around. Rev­enue from North Amer­ica in­creased just 1.4 per cent se­quen­tially (3.6 per cent, y-o-y) in con­stant cur­rency terms. The BFSI seg­ment saw rev­enue grow by 1.9 per cent se­quen­tially, which is down from 2.3 per cent growth recorded in the June quar­ter. The re­tail seg­ment saw rev­enue drop by 0.9 per cent.

Rev­enue from dig­i­tal ser­vices grew 5.9 per cent se­quen­tially on a con­stant cur­rency ba­sis. This was a key high­light in the com­pany’s Q2 score­card.

Given the chang­ing dy­nam­ics within the IT sec­tor, the

Ra­jesh Gopinathan, CEO and MD, TCS, flanked by Ajoy Mukher­jee (left), Ex­ec­u­tive Vice-Pres­i­dent and Head-Global Hu­man Re­sources, and N Gana­p­a­thy Subra­ma­niam, COO, an­nounc­ing the com­pany's re­sults in Mum­bai on Thurs­day

growth of a com­pany will be de­pen­dant on the strength of its dig­i­tal and an­a­lyt­ics of­fer­ings.

How­ever, given TCS’ mod­est over­all rev­enue growth over the last two quar­ters, it is very likely that the com­pany will miss the tar­geted growth for the in­dus­try. Nass­com had es­ti­mated a growth of 7-8 per

cent in rev­enues in 2017-18. In the Septem­ber quar­ter, the com­pany added only one new client in the $100 mil­lion plus bucket.

Mar­gin im­prove­ment

Thanks to the weak ru­pee and also some op­er­a­tional im­prove­ment, the op­er­at­ing profit mar­gin for the com­pany

ex­panded in the Septem­ber quar­ter. It came in at 25.1 per cent up 170 ba­sis points over the June quar­ter.

Of this, the com­pany at­tributes 50 ba­sis points gain to the tail winds from ex­change rate move­ment and the rest 120 ba­sis points from op­er­a­tional ef­fi­cien­cies across the busi­ness spec­trum.

Key mar­kets still stag­nant SHASHI ASHIWAL

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