TCS posts lower dollar-revenue growth than Infosys in Q2 FY16

India’s largest exporter of software services, Tata Consultancy Services (TCS) on Tuesday posted a 3 percent sequential rise in dollar revenue during the July-September quarter of the current fiscal, failing to match smaller rival Infosys’s 6 percent jump in dollar revenue during the same period. 

In dollar terms, TCS’s revenue, in the fiscal second quarter, grew by 5.8 percent year-on-year (y-on-y) to $4.16 billion, while its profit stood at $926 million, up 6.2 percent y-o-y and 3.2 percent sequentially. Infosys had posted a profit of $519 million, up 9.1 percent sequentially and 1.6 percent y-o-y in the three-month period. 

Besides, TCS announced a second interim dividend of Rs 5.50 per equity share of Rs 1 each of the company. 

“We have delivered accelerated growth in constant currency terms for Q2. Driven by great execution on the ground, our broad-based performance has been led by strong sequential growth in BFS, Retail and Life Sciences verticals with UK and North America leading the markets,” said N Chandrasekaran, CEO and managing Director, TCS. 

In Q2, TCS recorded a 3.9 percent rise in sequential dollar revenue growth in constant currency terms. India’s second-largest IT-services firm Infosys posted a 6.9 percent jump in dollar revenue growth in the same quarter. 

For companies with large foreign operations, constant currency growth is seen as an indicator of real growth. Software services firms use this method to eliminate the effects of exchange rate fluctuations while calculating financial results.

In rupee terms, Mumbai-headquartered TCS reported a net profit of Rs 6,055 crore in the quarter ended September. On a sequential basis, the company’s profit rose 6.1 percent. It’s revenue during the period stood at Rs 27,165 crore, up by 14.1 percent y-o-y and 5.8 percent quarter-on-quarter.

Rajesh Gopinathan, CFO, TCS said, “Growth was broad based in Q2 with all industries growing on a sequential basis led by BFS, retail, life sciences and travel and hospitality. Core markets like UK, North America and Europe grew smartly along with emerging markets like Latin America, India and MEA. Our focus on profitability have increased our margins sequentially and generated strong cash flows while investing for future growth.” TCS recorded a robust volume growth of 4.9 percent in Q2 FY16.

In the quarter under review TCS clocked a net addition of 10,685 employees, taking its total workforce to 3,35,620 employees. The utilisation rate (excluding trainees) was at a high of 86 percent and after including trainees, it was 82.3 percent. The attrition rate on a last twelve month basis (LTM) was at 16.2 percent.

“Our hiring continues to be strong with all time-high of over 25,000 employees joining us this quarter,” said Ajoy Mukherjee, executive VP and global head, Human Resources, TCS. With the growing adoption of digital services the company said it trained over 30,000 employees in new technologies. 

Shares of TCS closed at Rs 2,597.40 a piece, marginally up 0.19 percent on the Bombay Stock Exchange before the earnings announcement on Tuesday. The sensitive index, Sensex, ended the day marginally down by 0.21 percent.