TCS net profit jumps 8% on year in September quarter, dividend declared

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TCS Q2 earnings FY23

TCS earnings: Kicking off the earnings season for the information technology sector in the July to September 22 quarter, India’s largest IT services provider TCS has released its earnings report. Here are the major highlights: 

TCS July-September earnings: Highlights

TCS Q2 net profit rises on-year: TCS has reported a rise in net profit QoQ and YoY to Rs 10,431 crore in July-Sep 2022 period, above analysts' expectations. Analysts had earlier estimated a net profit of about Rs 10,151 crore. The company reported 8.4% growth year on year. In the same period last year, the net profit was Rs 9,624 crore.

TCS Q2 revenue beats estimates: TCS' revenue increased 18% on-year and 4.83% on-quarter to Rs 55,309 crore in July-Sep 2022, above expectations. Analysts had anticipated revenue of Rs 54,949 crore. In constant currency, the increase in revenue is 15.4% year-on-year (YoY). Growth was led by Retail and CPG (22.9%), Communications & Media grew by +18.7%, and the Manufacturing vertical (+14.5%). Technology & Services grew +15.9%, Life Sciences and Healthcare grew +14.7%, Communications & Media grew +18.7% and BFSI jumped +13.1%.

TCS Q2 results- Geographical Revenue: All Industry Verticals Grow Mid to High teens. Among major markets, growth was led by North America (+17.6%) and Continental Europe (+14.1%), while the UK grew by +14.8%. Among emerging markets, growth was led by Latin America (+19.0%), and India outperformed with the growth of (+16.7%), followed by Asia Pacific (+7%) and the Middle East & Africa (+8.2%).

TCS quarterly results- Margins rise sequentially: TCS’s operating margin stood at 24%, a rise of 90 basis points from the previous quarter. The net margins for Q2FY23 increased to 18.9% compared to 18% in the previous quarter. However, year on year, the margins contracted by 1.6%.

TCS earnings- Deal wins: There were multiple large deals wins for the digital transformation of operations in the data center and network, digital workspace, and customer experience. The company's order book stood at $8.1 billion at the end of the September quarter. 

TCS Q2 results- Dividend: The board has declared an interim dividend of Rs 8 per share for the sixth consecutive quarter. The record date is 18th October 2022, and the payment date for the dividend is November 7, 2022.

TCS Q2FY23 earnings- Attrition: TCS said that the attrition increased to 21.5% compared to 19.7% in the last quarter. The company has said that its attrition has peaked now and should taper down in coming quarters. Employee headcount stood at 6,16,171, a net addition of 9,840 in the quarter.

TCS quarterly results 2023- Management Commentary: "Demand for our services continues to be very strong. We registered strong, profitable growth across all our industry verticals and in all our major markets. Our order book is holding up well, with a healthy mix of growth and transformation initiatives, cloud migration, and outsourcing engagements.", Rajesh Gopinathan, TCS Chief Executive Officer and Managing Director.

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