The revenue performance was in line with Street expectations, and was helped by improved business from clients, but profits were ahead of analysts' estimates aided by better margins and other income. Bloomberg consensus estimates had forecast the IT major's net profit at Rs 6,287 crore on revenues of Rs 30,508 crore.
The Tata group company's business volume increased, as it won 47 clients, including an engagement with British insurer Lloyd's, to provide policy administration for over 4 million clients using its platform.
TCS' digital revenue saw an increase of 31 per cent year- on-year and accounted for 19.7 per cent of the company's revenues.
"Operating margin expanded 1.7 per cent sequentially to 25.1 per cent for the quarter, while volume growth was up 3.2 per cent quarterly", said the company in a statement.
Under the International Financial Reporting Standards (IFRS) or in dollar terms, the net income at $1,000 million in Q2 was up 8.4 per cent from $923 million quarter ago and 1.6 per cent up from $984 million in the same period year ago.
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The results of TCS, the first to report quarterly earnings among Indian software exporters, augur well for the nation's information technology sector amid concerns companies could report muted financial performance in the second quarter because of a slowdown in the USA financial services and retail industries. Profitability beat was driven by strong cost management both on operational factors (sub-contracting) and selling, general and administrative expenses (savings on visa/travel and other G&A). The company's net profit for the July-September period stood at Rs 6,460 crore as compared to Rs 5,950 crore in April - June period. On a year on year basis, all industry verticals - with the exception of BFSI (banking and financial services) and retail - grew above 9.5 per cent. TCS's revenue number is actually uninspiring. On the NSE, shares of the company jumped 1.91 per cent to close at Rs 2,548.20.
During the quarter, TCS saw its IT attrition rate (LTM) come down by 0.3 per cent sequentially to 11.3 per cent.
It added 15,868 employees in the quarter. The company added that North America grew by just 1.4 per cent with continued softness in banking and retail. Strong, broadbased client metrics this quarter demonstrates our increasing success with newer customers.
N. Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "it has been a very satisfying performance this quarter, striking a good balance between pursuing revenue growth, particularly in Digital opportunities, while tightening our execution to deliver greater efficiency".
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