TCS Q2 results beat estimates

Last updated: 07 Oct, 2020 | 03:57 pm

TCS Q2 results beat estimates
  • Net Profit: TCS has reported a 6.6% on-quarter rise in net profit to ₹7,475 crore in Q2FY21. The profit was impacted as the company set aside Rs 1,218 crore as an exceptional item for damages paid in a U.S litigation.
  • Revenue beats estimates: TCS’s revenue rose 4.73% on-quarter to Rs 40,135 crore—higher than the estimated Rs 39,133 crore. TCS’s revenue grew across all verticals, except manufacturing. The table below shows the QoQ difference in sales for all verticals of TCS.
  • Margins recover: Operating margin of the company expanded 2.2 per cent YoY to 26.2 per cent. Net margin stood at 21 per cent. TCS’ revenue and margin outperformance came on the back of strong deal wins. The company reported deal wins of $8.6 billion during the quarter. This includes the $2.5 billion contract with U.K.-based Phoenix Group which was announced earlier but executed between July-September.
  • Dividend: The board recommended an interim dividend of Rs 12 per share. This will be paid on November 3rd. The company has fixed October 15th as the record date. 
  • Share Buyback: TCS’s board has approved a share buyback proposal amounting up to Rs 16,000 crore. The company will buy 5.33 crore shares at Rs 3,000 per share, a premium of about 9.6% from today’s closing price.

TCS has reported very strong results in Q2FY21, backed by strong deal wins and revenue pick-up across all segments. TCS said that Jul-Sep quarter’s deal pipeline has been characterised by a very broad-based pickup in deal signings for relatively mid-and small-sized deals as opposed to very large deals.

While the ongoing pandemic has affected various businesses, has forced a tectonic shift in businesses processes to move towards greater digitization providing a good opportunity for IT industry. Given its leadership position in the market, TCS is well-placed to take advantage of this shift. 

TCS is confident that this demand recovery has strong legs. This is not catch-up demand but rather sustained demand momentum. While it has not provided any revenue guidance for the year, the company is confident of taking advantage of secular demand going forward.

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