Tata Consultancy Services Ltd's Q2FY20 consolidated net profit declines 1.1% qoq to Rs8,042cr: Misses Estimates

The company’s consolidated revenue stood at Rs38,977cr, up 2.1% qoq and 5.8% yoy.

October 10, 2019 6:00 IST | India Infoline Research Team

Tata Consultancy Services Ltd Q2FY20

Consolidated Results Q2FY20: (Rs in cr)

Q2FY20 QoQ (%)
Revenue 38,977 2.1
EBIT 9,361 1.5
EBIT Margin (%) 24 [14]
Net Profit (adjusted) 8,042 [1.1]
***EBIT margin change is bps
TCS reported lower-than-expected numbers for Q2FY20. The company's INR revenue grew by 2.1% qoq and 5.8% yoy to Rs38,977cr, lower than consensus estimates of Rs39,371cr. Constant currency (cc) revenue grew by 8.4% yoy and dollar revenue came in at $5,571mn (+0.6% qoq and +5.8% yoy). EBIT stood at Rs9,361cr, up 1.5% qoq but down 4.2% yoy against the consensus estimate of Rs9,922cr. EBIT margin contracted by 14bps qoq and 250bps yoy to 24%. PAT declined by 1.1% qoq but grew by 1.8% yoy to Rs8,042cr against consensus estimates of Rs8,266cr.
  • Digital revenue grew by 27.9% yoy cc and now accounts for 33.2% of overall revenues.
  • Revenue growth was led by Life Sciences & Healthcare (+16% yoy cc) and Communications & Media (+11.8% yoy cc).
  • BFSI (+8% yoy cc), Manufacturing (+7.8% yoy cc), Technology & Services (+5.6% yoy cc) and Retail & CPG (+4.8% yoy cc) – continued to grow. Banking and retail growth was witnessed despite increased volatility in the above verticals.
  • Amongst geographies, growth was led by Europe (+16% yoy cc) and UK (+13.3% yoy cc). North America grew at 5.3% yoy cc, Asia pacific grew by 6.5% yoy cc, while Emerging markets were up 7-8% yoy cc.
  • The attrition rate stood at 11.6%.
  • The management remains confident as the medium- and longer-term demand for its services continues to be very strong, evidenced by the company's Q2 order book.
  • The Q2 order book is the largest in the last six quarters.

Technical View:

Tata Consultancy Services Ltd is currently trading at Rs. 2,009.55, down by 11.1 points or 0.55% from its previous closing of Rs. 2,020.65 on the BSE.
The scrip opened at Rs. 2,028 and has touched a high and low of Rs. 2,039 and Rs. 1,998.85 respectively. So far 23,65,364 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 100 DMA.

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