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TCS Financial Results Q2 FY2023: Net Profit has risen by 8%YoY to ₹10,465 cr, Revenues by 18%

11 October 20224 mins read by Angel One
TCS released its report card for the second quarter of FY2023 which shows robust growth in both revenue and profit across multiple segments.
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Introduction

India’s largest software consultancy services exporter Tata Consultancy Services (TCS) has released its Q2 report card for the period ending in 30th September, 2022. 

The report shows the company’s performance to exceed all expectations with an increase in revenue from operations of 18% YoY, standing at ₹55,309 cr – much higher than the ₹46,867 cr of Q2 of the previous year. 

The figures in the report were based on Ind AS and IFRS standards.

Quarter-on-Quarter Growth

Data Sep 2022 (Q2 Fy23) June 2022 (Q1 Fy23)
Operating Profit ₹14,516 cr ₹13,416 cr
Profit Before Tax ₹14,096 cr ₹12,776 cr
Net Profit ₹10,465 cr ₹9,519 cr
EPS ₹28.51 ₹25.90

Profits and dividends announced 

The operating margin was announced to be at 24% (a 1.6% drop since the last quarter), while net margin was standing at 18.9%. Sequentially, profit has increased by 9.93%. The company received net cash from operations of $1,327 million which was 102.3% of its net income.

The company has announced an interim dividend of ₹8 per share – the record date being 18/10/2022 and payment date being 7/11/2022. The TCS share is currently trading at ₹3118.55. 

Sources of growth

In terms of customer segment, the largest growth came from Retail and CPG (22.9%), Communications and Media (18.7%)  and Technology and Services (15.9%) – all figures being YoY in constant currency terms. There was strong, broad-based growth for all services in Q2, led by Cloud, Enterprise Application Services, and Cyber Security.

In terms of major markets, the largest growth came from North America (17.6%) Continental Europe (14.1%) and UK (14.8%). In emerging markets, India grew by 16.7%, Latin America grew by 19%, Middle East & Africa grew  by 8.2% and Asia Pacific grew by 7%

Rajesh Gopinathan, CEO and MD said, “Demand for our services continues to be very strong. We registered strong, profitable growth across all our industry verticals and in all our major markets.” TCS also highlighted how several major companies abroad such as Sainsbury’s, Catalent Pharma Solutions, PostNord, Bane Nor etc. have chosen to work with TCS for their business solutions.

Situation of the workforce

In terms of human resources, TCS’ workforce stood at 616,171 on September 30, 2022, seeing a net addition of 9,840 during the quarter. It however, also registered a 21.5% attrition rate on the past twelve months’ basis in IT services. 

Milind Lakkad, the Chief HR Officer said, “We believe our quarterly annualized attrition has peaked in Q2 and should see it taper down from this point, while compensation expectations of experienced professionals moderate.”

Conclusion

TCS has seen growth beyond expectations and this may be followed by major changes in its stock price in the coming months.

Disclaimer: This blog is exclusively for educational purposes. The securities quoted here are only exemplary and not recommendatory.

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