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TCS falls short of expectations in Q2, reports tepid growth
The largest software exporter TCS on Thursday reported a tepid growth in net income for the September quarter at Rs 8,042 crore, and guided towards more challenges putting a big question mark over its ability to deliver the double-digit growth trajectory.
Mumbai: The largest software exporter TCS on Thursday reported a tepid growth in net income for the September quarter at Rs 8,042 crore, and guided towards more challenges putting a big question mark over its ability to deliver the double-digit growth trajectory.
The gap between operating profit margins achieved and the aspirational number in the region of 28 per cent widened, with the quarterly number printing in at a low 24 per cent. In what can be seen as an effort to calm the investors, the Tata Group company declared a second interim dividend of Rs 5 along with a special dividend of Rs 40.
TCS was the first large firm to open the second quarter earnings season and it would be interesting to see what others report in the coming days, especially its immediate rival Infosys on Friday.
Significantly, hours ahead of the TCS numbers, domestic ratings agency Crisil said it expects India Inc's revenue growth to fall to a 14-quarter low during this earning season. It can be noted that citing rising uncertainties in the business environment, the software industry lobby Nasscom had in February stopped giving its yearly revenue growth estimates for the sector.
The Tata Group cash-cow delivered a tepid 5.8 per cent spike in revenue growth at Rs 38,977 crore for the quarter, blaming the sluggishness in its mainstay of banking and also the retail sector for its woes. "It is definitely lower than what we had thought at the start of the year," managing director and chief executive Rajesh Gopinathan told reporters departing from the company's typically cautious stance on commentary.
"We expected it to be a defining quarter, but it has come in wherever it is, and we would require H2 to be better than H1 to get into double-digits. But we will have to wait and see how it unfolds," he said. As a silver-lining, he said, he isn't worried much about the demand environment as a whole as the deal pipeline is still strong and hinted at "right-sizing" the cost base to improve on the margins.
