Tata Consultancy Services: Q2FY14 Result Analysis

IT giant Tata Consultancy Services (TCS) has once again beat the street’s estimates for Q2FY14. The highlight for the results of this quarter is that the company has recorded the highest volume growth in the past 9 quarters. For Q2FY14, this stood at 7.3% on a sequential basis. The topline grew 16.6% on a sequential basis to come in at Rs 20977 crore. The operating profit stood at Rs 6305 crore, a stupendous jump of 30% on a QoQ basis, and the operating margins stood at 30.1%. The net profit stood at Rs 4633 crore, up 20.7% on a sequential basis.

Commenting on the Q2 performance, TCS’ Chief Executive Officer and Managing Director, N Chandrasekaran said: “It has been another great quarter. We have demonstrated all-round strong growth across markets and industries, highlighted by efficient and rigorous execution. Our ongoing investments in industry-led solutions and our efforts to provide insights and articulate the relevance of the digital revolution to business is helping us gain mindshare with customers and differentiate the TCS brand in the market. He also added that “We continue to see a robust demand pipeline across markets and a unique opportunity to strategically partner and participate with clients as they reimagine their future in multiple dimensions.”

In the filing, the company said that the growth in Q2 was broad-based, with all industries contributing to this holistic performance. Growth was led by Life Sciences, Media, Energy & Utilities and BFSI. All the core markets grew smartly, with Europe, North America and UK leading the pack.

The company added 17362 employees during the quarter on a consolidated basis. The utilisation rate (excluding trainees) in the quarter gone by was at 83.4% (75% including trainees), while the attrition rate in the past 12 months was stable at 10.9% (including BPO).

In addition to this, TCS has also declared a second interim dividend of Rs 4 per share. Backed by this strong set of numbers, the stock is likely to remain in focus in tomorrow’s trading session.