TCS Q2 net profit up 14.1% at Rs 9,624 crore

Tata Consultancy Services (TCS) on Friday reported a 14.1 per cent rise in consolidated net profit to Rs 9,624 crore in the September 2021 quarter, aided by broad-based growth across geographies and verticals.

The Mumbai-based company had logged a net profit of Rs 8,433 crore (excluding adjustment towards a legal claim) in the year-ago period.

Its revenue grew 16.7 per cent to Rs 46,867 crore for the September 2021 quarter from Rs 40,135 crore in the year-ago period.

Terming the September quarter as one of the best quarters in terms of topline growth, TCS CEO and managing director Rajesh Gopinathan said the growth has been broad-based with the North America market recording over 17 per cent growth, and strong traction in markets like the UK and Europe.

All verticals grew over 15 per cent year-on-year with BFSI (banking, financial services and insurance) crossing $2 billion in quarterly revenue run rate.

"...whether it be across geographies or across verticals, the driver of this growth is coming from digital transformation agenda...we are confident about the long term visibility we are enjoying," he noted.

The total contract value of deals in the second quarter of FY22 was at $7.6 billion, while it was $15.7 billion for the first half of the fiscal amid an increased momentum in North America, BFSI, retail and manufacturing segments.

TCS - which is India's largest IT services company - has seen strong client addition, bringing in five new customers (total of 54) in $100 million-plus slab.

"We are seeing an acceleration in terms of clients' digital agenda... the demand pipeline that we see continues to be very strong and it is quite robust," Gopinathan said.

TCS Board has approved the re-appointment of Gopinathan as CEO and MD for a term of five years from February 21, 2022, to February 20, 2027.

It has also endorsed the re-appointment of N Ganapathy Subramaniam as chief operating officer and Executive Director from February 21, 2022, to May 19, 2024.

Subramaniam is the brother of Tata Sons chairman N Chandrasekaran.

The re-appointments are based on the recommendations of the Nomination and Remuneration Committee and subject to the approval of the shareholders.

The company has also announced an interim dividend of Rs 7 per share.

The record date has been set as October 19, 2021.

"Strong growth and disciplined execution helped us overcome headwinds from currency and supply-side inflation and deliver expanded margins.

"Our industry-leading profitability and strong cash conversion give us the wherewithal to make the right investments needed to build out the business of the future," TCS chief financial officer Samir Seksaria said.

The company has added 19,690 people (net), taking its headcount to 5,28,748 people at the end of September 2021.

IT services attrition rate (LTM) was at 11.9 per cent.

"We brought on board a record number of 43,000 fresh graduates in the last six months... Investing ahead of time in building our own pipeline of talent has helped us overcome supply-side challenges, and meet the execution timelines of our customers' growth and transformation programs," TCS chief HR officer Milind Lakkad said.

He added that with 70 per cent of TCS staff fully vaccinated, and over 95 per cent having received at least one dose, the company plans to gradually get its workforce back in the office by the end of this year.

"Our attrition numbers are inching up slowly in line with wider trends in the industry but we continue to maintain industry's best retention rates," Gopinathan said.

TCS expects to hire another 35,000 people in the second half of FY22.

Photograph: Danish Siddiqui/Reuters