TCS Profit Drops 13% In June Quarter, Misses Analysts' Estimates
TCS reported a 4% sequential decline inrevenue from operations to Rs 38,322 crore
Tata Consultancy Services (TCS), the country's largest IT services company, on Thursday reported a 13 per cent decline in net profit for the April-June period compared to the previous quarter. Tata Consultancy Services' net profit came in at Rs 7,008 crore in the June quarter, as against Rs 8,049 crore in the quarter ended March 31, 2020. In a filing to stock exchanges after market hours, Mumbai-based TCS reported a 4 per cent sequential (quarter-on-quarter) decline in revenue from operations to Rs 38,322 crore.
In constant currency terms, its revenue declined 6.3 per cent on a year-on-year basis, TCS said in a press release. The company's operating margin came in at 23.6 per cent, whereas its net margin stood at 18.3 per cent.
"We have taken a supportive approach to employees and vendors, and used other efficiency levers to limit the impact of the sharp revenue decline during the quarter, and still delivered an industry-leading operating margin," said V Ramakrishnan, chief financial officer, TCS.
"Disciplined execution resulted in superior cash conversion and a strong cash balance that positions us very well to weather the downturn," he said.
During the quarter, the company's life sciences and healthcare segment continued to grow strongly at 13.8 per cent (year-on-year).
However, the company's all other industry verticals showed declines of varying degrees:
- Banking, financial services and insurance segment (BFSI): -4.9%
- Retail and consumer packaged goods (CPG): -12.9%
- Communications and media: -3.6%
- Manufacturing: -7.1%
- Technology and services: -4%
"The revenue impact of the pandemic played out broadly along the lines we had anticipated at the start of the quarter. It affected all verticals, with the exception of Life Sciences and Healthcare, with varying levels of impact. We believe it has bottomed out, and we should now start tracing our path to growth," said Rajesh Gopinathan, CEO and managing director, TCS.
TCS said its consolidated headcount stood at 4,43,676 as of June 30, 2020. The company said its workforce continues to be very diverse, comprising 146 nationalities and with women constituting 36.2 per cent of the base.
The IT major's board declared an interim dividend of Rs 5 per share.
Shares in TCS had ended 0.60 per cent lower at Rs 2,204.35 apiece on the BSE ahead of the earnings announcement, underperforming the benchmark Sensex index which climbed up 1.12 per cent to close at a four-month high.