Info-tech

TCS reports 6.45% profit in Q2; to buyback up to Rs 16,000 cr in shares

Our Bureau. MUMBAI | Updated on October 07, 2020

Rajesh Gopinathan, CEO and MD, TCS

To roll out salary hikes from Oct 1

TCS has delivered a broad-based performance, signalling a fast-track recovery in its growth as clients increasingly rely on technology to overcome economic stress created by the ongoing pandemic. India’s largest software exporter posted a net profit of ₹7,504 crore for the September-ended quarter, a 6.45 per cent growth compared to the ₹7,049 crore posted in the June-ended quarter.

However, on a year-on-year basis, profits dipped 6.8 per cent compared to ₹8,058 crore in the corresponding period last year.

“We are not out of the woods as yet due to the economy and Covid-19, but the underlying demand recovery seen in our clients can be sustained,” said Rajesh Gopinathan, Chief Executive Officer and Managing Director, TCS.

 

Revenues on a sequential basis came in at ₹40,135 crore, a 4.7 per cent growth over the ₹38,322 crore posted in the June-ended quarter. Year-on-year, revenues grew almost 3 per cent on revenues of ₹38,977 crore.

TCS’ board approved a share buy-back proposal amounting to ₹16,000 crore at ₹3,000 per share, or 1.42 per cent of the total paid-up equity capital. In 2018, TCS had undertaken a share buyback worth ₹16,000 crore, at ₹2,100 per share, totalling 7.61 crore shares. In 2017, too, TCS had undertaken a similar share purchase programme. Gopinathan maintained that the buyback is in line with the company's shareholder returns strategy.

Interim dividend

Also, the company declared a second interim dividend of ₹12 per share. TCS ended the quarter with ₹58,500 crore in cash.

“It is a stellar quarterly performance driven by strong revenue growth and strong TCV of deal wins and outlook on deal-pipeline is extremely positive,” said Urmil Shah, Research Analyst and VP, IDBI Capital. The deal wins for the quarter were strong with total contract value at $8.6 billion against $6.9 billion in the first quarter.

Revenue growth in the September quarter was led by BFSI segment, which grew 6.2 per cent on a quarterly basis. Retail, which was hit the most in the March and June quarters, grew 8.8 per cent and Life Sciences and Healthcare expanded 6.9 per cent.

In Q2, the EBIT margin saw significant improvement over Q1, coming in at 26.2 per cent, a 2.6 per cent improvement, which is a two-year high for the company. North America grew 3.6 per cent, the UK 3.8 per cent, and Continental Europe 6.1 per cent. On the new rules regarding H-1B visas, TCS said it is too early to assess the impact and is waiting for details. In the September-ended quarter, TCS added 9,864 employees and said that attrition has hit an all-time low at 8.9 per cent. It also said that salary increases will be rolled out from October 1. In the September-ended quarter, TCS made a provision of ₹1,218 crore for the EPIC Systems Corporation legal case.

“We are not out of the woods as yet due to the economy and Covid-19 but the underlying demand recovery seen in our clients can be sustained.”

Samir Seksaria to be new CFO

Samir Seksaria, Vice-President Finance will take over as TCS CFO from V. Ramakrishnan, who will be retiring from the company.

This will be effective May 1, 2021, TCS said in a filing to the exchanges.

"The Board of Directors has, at its meeting held today, based on the recommendations of the Nomination and Remuneration Committee, appointed Samir Seksaria as Chief Financial Officer Designate, and he would take over from Ramakrishnan V. as the Chief Financial Officer, effective May 1, 2021," it said.

Seksaria has been with TCS since 1999 and has held various positions in business consulting and finance. He currently heads the Financial Analytics, Planning and Business finance function. He is a commerce graduate from Narsee Monjee College, Mumbai and a member of the Institute of Chartered Accountants of India.

TCS to consider share buyback on October 7

 

Published on October 07, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor