Tata Consultancy Services Ltd's Q2FY19 consolidated net profit rises 7.6% qoq to Rs7,901cr : Beats Estimates

The company’s consolidated revenue stood at Rs36,854cr, up 7.6% qoq and 20.7% yoy.

Oct 11, 2018 12:10 IST India Infoline Research Team

Tata Consultancy Services Ltd Q2FY19

Consolidated Results Q2FY19: (Rs in cr)

Q2FY19 QoQ (%)
Revenue 36,854 7.6
EBIT 9,771 13.9
EBIT Margin (%) 26.5 148
Net Profit (adjusted) 7,901 7.6
***EBIT margin change is bps

TCS reported better than expected numbers for Q2FY19 on all fronts. INR revenue grew by 7.6% qoq to Rs36,854cr, higher than median consensus estimates of Rs36,501cr. Constant currency (cc) revenue rose 3.7% qoq and USD revenue increased 3.2% qoq at USD5,215mn. EBIT stood at Rs9,771cr, up 13.9% qoq against the median consensus estimate of Rs9,633cr, EBIT margin expanded by 148bps qoq to 26.5%. PAT increased 7.6% qoq to Rs7,901cr against median consensus estimates of Rs7,854cr.
  • BFSI, Retail verticals which were a drag in the past have maintained their momentum from Q1FY19 and have grown at 3.5% cc qoq and 3.4% cc qoq respectively. The management pointed that growth in BFSI was even both geographically and within segments like Banking and Insurance.
  • In Retail vertical, the company continues to benefit from tech spend by brick-and-mortar players.
  • Energy & utilities and Communication & Media were flat after multiple quarters of strong growth. Life-sciences was robust at 5.7% cc qoq, while manufacturing remained steady at 1.6% cc qoq.
  • Geographically, North America grew 2.8% cc qoq aided by BFSI, while both UK and Continental Europe remained strong and grew 6% and 4.1% cc qoq respectively.
  • Digital revenue at 28%, was up 60% cc yoy. The management attributed this to effectiveness of its Business 4.0 strategy and robust delivery capabilities (agile first).
  • The management has stated that its Machine first philosophy and agile delivery model is resonating well with clients and leading to market share and mindshare gains.
  • 4 new clients were added in the USD100mn+ band, 7 in the USD20mn+ band, 10 in the USD10mn+ band, 11 In the USD1mn+ band.
  • IT Services attrition rate was steady at 10.9% LTM.
  • The TCV of deal was USD4.9bn with BFSI and retail share of USD1.5bn and USD0.7bn. North America TCV was USD2.4bn.
  • The management is optimistic about double digit growth rate for FY19 and margins to remain in the current band.

Technical View:

Tata Consultancy Services Ltd ended at Rs. 1,979.75, down by 63.3 points or 3.1% from its previous closing of Rs. 2,043.05 on the BSE.
The scrip opened at Rs. 1,998.70 and touched a high and low of Rs. 2,013.55 and Rs. 1,943.05 respectively. A total of 50,58,461 (NSE+BSE) shares were traded on the counter. The stock traded above its 50 DMA.

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