New Delhi, Oct 12 Shares of Tata Consultancy Services (TCS) today rose by almost 2 per cent ahead of its September quarter earnings announcement later in the day. The revenue performance was in line with Street expectations, and was helped by improved business from clients, but profits were ahead of analysts' estimates aided by better margins and other income. In the first quarter, the company had reported net profit of Rs 5,945 crore.
In a first cut analysis prior to TCS's earnings call with investors, Emkay Global's analyst said, "We believe that the company has delivered strong growth and profitability performance despite sustained pricing pressure and weak INR realisations".
The company has posted net profit of Rs.105.73 crores for the 6 months period ended September 30, 2017 as against Rs.110.49 crores for the 6 months period ended September 30, 2016.
TCS' profit was boosted by a 170 basis points increase in its EBIT margin or operating margin to 25.1 per cent in Q2. "People are looking at multiple technologies and how to leverage them", he said.
Brokerages have predicted a good season for the Indian IT sector and say that it is expected to post the strongest growth in the last five quarters supported by cross-currency gains, with TCS and Infosys leading revenue growth at over 3.2% QoQ.
"In retail we're seeing a significant amount of traction".
During the quarter, the company added six clients in each of the $ 10 million and above, $ 20 million and above, and $ 50 million and above billing segments of clients. At least 30,000 employees have been re-skilled over the past quarter.European business grew 5.3 per cent over the quarter, while Latin America grew 5.7 per cent.
The results of TCS, the first to report quarterly earnings among Indian software exporters, augur well for the nation's information technology sector amid concerns companies could report muted financial performance in the second quarter because of a slowdown in the USA financial services and retail industries. "Gopinathan said the firm expects growth to return in both banking and retail sectors as traditional firms overcome fears regarding disruption from fintech startups and online commerce companies".
The company has declared an interim dividend of Rs 7 per share.
Gopinathan said the company is close to sealing a United States dollars 50 million deal in offering internet of things solutions.