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'Unusual' Quarter, Says TCS Chief As It Posts Net Profit Of Rs 6,586 Crore

TCS reported an operating margin of 26 per cent, beating the Street's expectations of 25.26 per cent.
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TCS chief N Chandrasekaran said it has been an 'unusual Q2' for the outsourcer. (File photo)
TCS chief N Chandrasekaran said it has been an 'unusual Q2' for the outsourcer. (File photo)

Highlights

  1. TCS reported operating margin of 26%, beating the expectations of 25.26%
  2. September quarter revenues came in at Rs 29,284 crore
  3. TCS shares have underperformed the broader markets in last 6 months
India's biggest outsourcer Tata Consultancy Services (TCS) reported a better-than-expected net profit of Rs 6,586 crore in the three months ending September 30, described as an 'unusual' quarter by its CEO and MD, N. Chandrasekaran. 

TCS' net profit was boosted by a 94-basis-point improvement in its operating margin to 26 per cent in the September quarter. 

However, its revenue of Rs 29,284 crore was below estimates. 

TCS was expected to post net profit of Rs. 6,298 crore on revenue of revenue of Rs. 29,739 crore, according to an NDTV Profit poll of analysts. TCS had reported net profit of Rs. 6,317 crore on revenue of Rs. 29,305 crore in the June quarter. 

Also Read: TCS Chief N Chandrasekaran Shrugs Off Trump, Brexit Fears


The closely tracked dollar revenue inched 0.3 per cent higher sequentially to $4,374 million, which was below the Street's expectation of $4,441 million. 

Commenting on the Q2 performance, CEO and MD, N. Chandrasekaran said: "It has been an 'unusual Q2' for TCS. Growing uncertainties in the environment is creating caution among customers and resulted in holdbacks in the discretionary spending this quarter. In additional, volatility in markets like India and Latin America also muted revenue growth." 

"It has been a good quarter from a profitability perspective where despite multiple headwinds our disciplined approach and focus on operations has helped us deliver a strong margin performance," he added. 

Expectations were muted as TCS had earlier cautioned over its second-quarter performance, citing headwinds in the banking, financial services and insurance, or BFSI, segment. This segment contributes about 40 per cent to TCS's revenues. 

TCS shares have underperformed the broader markets over the past six months, falling 8 per cent during the period. In comparison, the Sensex has risen 8 per cent during this period. 

Earlier in the day, TCS shares closed 2 per cent lower at Rs. 2,328.
 

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