TCS Q2 Results: Consolidated PAT Rises By 9% YoY To Rs 11,342 Crore, Revenue Grows By 8%

India's largest tech firm, Tata Consultancy Services (TCS) recorded a mixed performance for the September 2023 quarter. The tech giant posted a consolidated net profit of Rs 11,342 crore, which is attributable to the shareholders of the company. The Q2FY24 PAT witnessed single-digit growths of 2.4% QoQ and 8.7% YoY. Noteworthily, TCS' dollar revenues declined sequentially for the first time in 17 quarters.

The company posted a net profit of Rs 11,074 crore in Q1FY24 and Rs 10,431 crore in Q2FY23.

During the quarter which is under review, TCS posted EBIT of Rs 14,483 crore, up by 2% sequentially, while EBIT margin expanded by 70 bps to 24.3% in Q1FY24. Notably, margin expansion drives EPS growth of 8.7% YoY.

On the top-line front, consolidated revenue from operations stood at Rs 59,692 crore, rising by a fractional 0.5% from Rs 59,381 crore in Q1FY24, but witnessed a growth of 7.9% from Rs 55,309 crore in Q2 of FY23.

In constant currency, the revenue growth came in at 2.8% YoY. However, dollar revenue was $7.2 billion for the quarter, declining by 0.2% sequentially which is for the first time since the April-June quarter of FY20.

Under industry-wise performance, revenue growth was led by the Energy, Resources and Utilities vertical which grew 14.8%, Manufacturing which grew 5.8% and Life Sciences and Healthcare which grew 5%. The Consumer Business Group (CBG) was also up 1%.

However, the concerning factor though is the Tata Group-backed company's BFSI segment which contracted by 0.5%, while Communications and media dipped by 2.1% and Technology and services declined by 2.2%.

IT firms' communications & media, BFSI and IT services segments are under pressure due to continued challenging macro conditions. Earlier, Accenture whose over 40% of the total workforce is in India, warned of weaker IT spending in the coming quarters. The Irish-American professional services company's CMT segment witnessed a 12% decline in the fourth quarter of fiscal 2023.

Experts warned about the feeble CMT (communications, media and technology) segment for Indian IT companies as well.

Among major markets, the United Kingdom led with 10.7% growth; North America grew 0.1% and Continental Europe grew 1.3%. In emerging markets, Middle East & Africa grew 15.9%, Latin America grew 13.1%, Asia Pacific grew 4.1% and India grew 3.9%.

Talking about the financial results, K Krithivasan, Chief Executive Officer and Managing Director, said: "Our clients continue to entrust us with critical new technology initiatives, and large programs to digitally transform their IT and business operating models. Strong deal momentum delivered us a very large order book in Q2 - our second highest TCV ever in a quarter, and good pipeline."

TCS's order book stood at $11.2 billion, with a book-to-bill ratio of 1.6 in the quarter.

Moreover, TCS has a strong GenAI-Ready workforce to the tune of more than 100,000 consultants.

N Ganapathy Subramaniam, Chief Operating Officer and Executive Director said: "We continue to make investments in our people and new technologies. We now have a 100,000-strong pool of Gen-AI Ready consultants and prompt engineers who are engaged in hundreds of Gen-AI projects for our clients across segments."

Further, Subramaniam said, "During the quarter, BSNL awarded us the project to integrate and deploy a modern, indigenous pan-India 4G and 5G mobile network. This is a huge milestone for TCS, and we have commenced the supply, planning, design, installation and commissioning, and optimization of this mobile network, satisfying a detailed set of requirements conforming to 3GPP standards and the roll-out will be completed in about 18 months."

Also, the TCS CEO added, "The resilience of demand for our services, our clients' willingness to commit to long tenure programs and their continued appetite for experimentation with Gen AI and other new technologies give us confidence in our longer-term growth prospects."

The company's total headcount stood at 608,985 as of September 30, 2023, reflecting the company's focus on improving workforce utilization and productivity. The IT services' attrition was at 14.9% for the last twelve months.

Apart from this, TCS has declared a second interim dividend of Rs 9 per share, alongside a buyback offer worth Rs 17,000 crore.

Ahead of the earnings, TCS share price closed at Rs 3,610.20 apiece, down by Rs 19 or 0.52%. TCS continues to be the largest Indian IT company, and largest firm in the country in terms of market share after RIL.

As of October 11, TCS market value stood at Rs 13,20,990.73 crore.