TCS Q2 Earnings: 5 key highlights from the IT major's September-quarter scorecard

The July-September quarter (Q2) earnings of Tata Consultancy Services (TCS) broadly came in line with estimates. TCS reported an 8.7 per cent year-on-year rise in its consolidated net profit (attributable to shareholders of the company) for the second quarter of the current financial year (Q2FY24). Sequentially, the consolidated net profit was up 2.4 per cent.

Along with the numbers, the company announced a dividend of ₹9 per share with a record date of October 19 and the payment date of November 7, 2023. Also, the company announced a share buyback of up to ₹17,000 crore at ₹4,150 per share.

"Strong deal momentum delivered us a very large order book in Q2 – our second-highest TCV ever in a quarter, and a good pipeline. The resilience of demand for our services, our clients' willingness to commit to long-tenure programs and their continued appetite for experimentation with Generative AI (Gen-AI) and other new technologies give us confidence in our longer-term growth prospects," said K Krithivasan, Chief Executive Officer and Managing Director of TCS.

“We continue to make investments in our people and new technologies. We now have a 1,00,000-strong pool of Gen-AI ready consultants and prompt engineers who are engaged in hundreds of Gen-AI projects for our clients across segments,” said N Ganapathy Subramaniam, Chief Operating Officer and Executive Director of TCS.

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Let's take a look at the key highlights of TCS' Q2 scorecard:

Key numbers in line with estimates

The IT major reported an 8.7 per cent year-on-year rise in its consolidated net profit (attributable to shareholders of the company) at ₹11,342 crore. Operating margin saw a nominal expansion of 0.3 per cent YoY at 24.3 per cent.

Revenue for the quarter under review rose 7.9 per cent YoY to ₹59,692 crore. In constant currency (CC) terms, TCS' Q2 revenue grew 2.8 per cent YoY.

“Our focus on improving employee utilization, while driving productivity improvement and cost efficiency across the organization, has helped us expand our operating margin to 24.3 per cent. We will continue to push the growth, efficiency and innovation levers to further improve our profitability," said Samir Seksaria, Chief Financial Officer, TCS.

Also Read: TCS Q2 Results: Net profit rises 8.7% on year to ₹11,342 crore; declares dividend

Degrowth in BFSI

TCS said Q2 growth was led by the energy, resources and utilities vertical which grew 14.8 per cent while manufacturing grew 5.8 per cent and life sciences and healthcare grew 5 per cent during the quarter.

The consumer business group (CBG) grew marginally by 1 per cent. On the other hand, BFSI (-0.5 per cent), communications and media (-2.1 per cent) and technology and services (-2.2 per cent) degrew during the quarter, TCS said.

Geographies

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

Human resources

TCS said IT services’ attrition was at 14.9 per cent for the last twelve months. The company added its workforce stood at 6,08,985 as on September 30.

"The employee base continues to be very diverse, with 35.8 per cent women and with 152 nationalities. Year to date, TCSers have clocked 26.4 million learning hours and acquired 2.6 million competencies including 3,50,000 high-demand competencies," said the IT major.

“Our strategy of proactively hiring bright freshers and investing in training them with the right skills is paying off. With that talent coming on stream and with reduced attrition, we were able to recalibrate our gross additions, keeping it below the departures during the quarter, driving up productivity and enhancing project outcomes,” said Milind Lakkad, Chief HR Officer of TCS.

Key deal wins

TCS said it has over 250 Gen AI opportunities in the pipeline, driven by a rich catalogue of use cases across industries, early adoption partnerships with hyper scalers and a 1,00,000-strong GenAI-ready workforce.

Among the key deal wins, BSNL has selected TCS to roll out a modern 4G and 5G mobile communication infrastructure across India covering 100K telecom sites, said TCS.

JLR (Jaguar Land Rover) has expanded its strategic partnership with TCS to accelerate digital transformation across its business, the company said in its BSE filing.

TCS said it was selected as a strategic partner by the Government of India to transform the Government e-Marketplace (GeM) platform.

A Dutch life insurance and pensions provider company Athora Netherlands has chosen TCS to transform its closed-book life business, the IT major said.

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