Information technology major Tata Consultancy Services (TCS) on Thursday said its consolidated net profit grew 22.6% to Rs 7,901 crore for the quarter ended September 30, 2018, from Rs 6,446 crore a year earlier, on the back of rising demand for digital transformation and depreciation of the rupee.
In the July–September quarter, TCS’ revenue rose 20.7% to Rs 36,854 crore, from Rs 30,541 crore a year ago.
Its dollar revenue also increased to $5.22 billion, from $5.05 billion in the April-June quarter. The company's operating margin increased 150 basis points to 26.5%, from 25% for the quarter ended June 30.
The country’s largest software exporter posted 3.7% revenue growth at constant currency terms over the quarter ended June, lower than the street's estimates.
Constant currencies are exchange rates which eliminate fluctuations while calculating financial performance numbers. The company's revenue grew 11.5% over a year in constant currency terms.
The rupee—which has plunged 9.5% over a year and 4.5% during the last quarter, hitting an all-time low of 74 against the dollar—is being seen a tailwind for the overall export-oriented IT sector.
Analysts were upbeat about TCS’ growth in the seasonally strong second quarter. Analysts at IDBI Capital Markets had projected a 4.5% quarter-on-quarter revenue growth for TCS in Q2.
Digital revenue grew 59.8% over a year in constant currency terms, contributing 28.1% to total revenue of TCS in the second quarter. The BFSI vertical also posted 6.1% growth, contributing $1.63 billion to overall revenue. The retail vertical reported a 15.6% year-on-year growth.
Its earnings per share for the quarter was Rs 20.66, up 22.7% over the year-ago period.
Calling this a “landmark quarter” for the company, Rajesh Gopinathan, managing director and chief executive officer at TCS, emphasised on the management’s urge to bounce back to double-digit growth again.
“Revenue growth was driven by expanding demand for digital transformation across verticals, and continued acceleration in BFSI and retail,” said Gopinathan.
The total employee strength of TCS was 411,102 at the end of Q2 on a consolidated basis, up from 389,213 in the corresponding period in the last financial year. It added 10,227 employees in the second quarter, the highest in 12 quarters
“This quarter, we introduced yet another innovation, democratising the entry-level talent acquisition processes in India with the TCS National Qualifier Test,” said Ajoy Mukherjee, executive vice president and global head, human resources.
TCS has added four new clients in the $100 million band, seven in the over $20 million band, 10 in the $10 million-plus band, and 11 in the band of over $1 million.
TCS’s shares on Thursday fell 3.1% to Rs 1,979.75 on the BSE, while the benchmark BSE Sensex plunged 2.19% to 34,001.15 points. The company's results were announced after market hours.