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Firing on all cylinders Tata Consultancy Services outperforms again

Will Tata Consultancy Services be crowned the undisputed king of the IT industry, questioned a leading financial newspaper earlier on Tuesday. If the software services exporters second quarter performance was to be considered then it could very well be.

TCS beat street expectations on Tuesday evening,  a similar story repeated quarter after quarter in recent years. Its net profit rose 34 percent year-on-year to Rs 4,702 crore and revenue gained 34 percent to Rs 20,977 crore.

In US Dollar terms, its profit was up 16 percent to USD 748 million, while revenue rose 17 percent to USD 3.34 billion.

The Mumbai-based firm is India’s largest IT company and has continued to march way ahead of its Bangalore-based rival Infosys and the rest of the pack that follows.

Infosys, once the bellwether, lost ground to TCS in the last couple of years, amid a management rejig and its continued focus on protecting margins, even as rivals offered more flexibility in pricing. Last week, Infosys too reported better-than-expected results for the July-September quarter, but TCS’ performance once again shows Infy has a lot of catching up to do.

TCS’ stellar performance was no doubt helped by the sharp depreciation in the Rupee last quarter, but new deals have also continued to flow in and across geographies its seeing a good momentum. 

“It has been another great quarter. We have demonstrated all-round strong growth across markets and industries, highlighted by efficient and rigorous execution…“We continue to see a robust demand pipeline across markets,” said N Chandrasekaran, MD and CEO.

TCS’ volumes rose a little over 7 percent in Q2, a nine quarter high. Its operating margin rose to 30.1 percent.

“Strong volumes, currency tailwinds and firm execution helped us post industry-leading operating margins in this quarter,” said Rajesh Gopinathan, CFO.

With the strong growth momentum continuing, TCS has now plans to increase its headcount too.

Chandrasekaran told reporters in Mumbai that the pipeline was looking good and they needed to look at scaling in Europe.

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Author:

I am a business journalist by profession and have close watch on equity markets and developments across FMCG, Retail, real estate, auto and information technology sectors in India. When not writing, I am an avid photographer (instagram.com/nachiket.kelkar) and Arsenal FC fan. I also love train spotting.

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