TCS climbs to fresh record on strong Q2 revenue growth

Shares of Tata Consultancy Services (TCS) hit a fresh record helped by the combination of strong revenue growth during the fiscal second quarter and the Rs 16,000 crore buyback plan.
TCS shares jumped by Rs 137.60 or 5.03% to a record Rs 2,875 apiece on the BSE in morning deals, outperforming the benchmark Sensex index which was up 1.22%.
TCS – the country’s second most valuable company – said it will buy back up to 5.33 crore shares at Rs 3,000 apiece, marking a 9.7% premium to their closing price on Wednesday.
India’s largest software services exporter reported second quarter profits growth of 4.9% to Rs 8433 crore, and revenue by 3% to Rs 40,135 crore. The company reported a 4.8% sequential growth in revenue in constant currency terms, ahead of analyst estimates. Operating margins stood at 26.2%.
The Mumbai-headquartered company also declared an interim dividend of Rs 12 per share.
TCS said it won deals worth over $8.6 billion, highest in recent quarters, as customers step up spending on technology to sustain and reinvent their business. The company has rolled out salary increases for its over 4.53 lakh employees effective October 1. In the quarter to September, TCS hired 9864 people.
The revenue growth came from across verticals and geographies, with the larger North American market clocking 3.6% growth. UK grew by 3.8% and Europe by 6.1%.
The attrition hit an “all time low” of 8.9% in the last twelve months.
Gross profit for the quarter was up 8.7% qoq to Rs 16,420 crore while gross margins expanded by 150 bps qoq to 40.9%.
EBIT for the quarter registered a growth of 16.2% qoq to Rs 10,515 crore while EBIT margins expanded by 260 bps qoq to 26.2%. Net profit for the quarter excluding legal claim provisions was up by 20.3% qoq to Rs 8,433 crore.
In Q1 of current fiscal, the IT firm reported a 14% fall in net profit to Rs 7,008 crore as business was disrupted by coronavirus pandemic.

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