TCS announces ₹16,000 crore buyback — strong show in Q2 with 7% rise in profit, margins near two-year high

Tata Consultancy Services (TCS) announces second quarter resultsIANS
  • Tata Consultancy Services (TCS) board of directors has approved the buyback of over 5 million equity shares worth ₹16,000 crore at the value of ₹3,000 each.
  • The company posted an adjusted profit of 20.3% in the second quarter with a jump of 4.8% in revenue (constant currency) sequentially.
  • TCS also announced a second interim dividend of ₹12 per ₹1 equity share.
  • Check out all the latest news and updates on Business Insider.
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Tata Consultancy Services (TCS) has delivered on all parameters. It put up a strong show in the second quarter, led by strong revenue growth and margin expansion.

Adjusted profit has risen 20% over last quarter, which excludes legal claim provisions amounting to around $165 million in TCS’ ongoing case against Epic Systems. The overall profit after tax stands at ₹7,475 crore, up 6.7% over the last three months.

India’s largest IT services company has also logged in revenue growth of 4.8% sequentially in constant currency. Consolidated revenues grew by 4.7% to ₹40,135 crore on a quarterly basis, while strong deal closures amounted to $8.6 billion.

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“The $8.6 billion also includes $2.5 billion with Phoenix systems, which was announced a few quarters back, but the contract got executed this quarter. Excluding that, it’s still a very herding $6.1 billion,” said TCS CEO Rajesh Gopinathan.

Margins remain strong, expanding by 2.2% yearly to 26.2% this quarter.

"What we are witnessing right now is the start of the first phase of a multi-year technology transformation cycle,” said TCS CEO Rajesh Gopinathan.

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TCS’ attrition is also at an all-time low of 8.9% as it adds 9,964 employees to its roster and plans to start rolling out salary hikes from October 1.

Buyback, dividend and a change of guard
Aside from the financials, the company also announced a mega buyback. The board of directors has approved the buyback of 53 million equity shares worth ₹16,000 crore. It amounts to around 1.42% of the total paid-up equity capital at ₹3,000 per share.

The company will also be doling out ₹12 per ₹1 equity share as a second interim dividend for shareholders.

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There’s also a change of guard afoot with TCS CFO V Ramakrishnan set to step down on April 30, 2021. The company has chosen Samir Seksaria, who is currently the vice-president of finance, as his successor. Seksaria has been with the company since 1991 and has held various positions within the organisation in business consulting and finance in that time.

TCS continues its winning streak
Analysts expected a good quarter for the company after it wrapped up around ten new deals over the last three months. The numbers are also a big step up from the previous quarter when the company posted a dip of 6.3% in its revenue and profit took a hit of 13%.

TCS recently became the second Indian company to cross the ₹10 lakh crore barrier after Mukesh Ambani’s Reliance Industries that has been on an investment hot streak.

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TCS new deal wins in the second quarter:
Client Sector
Forth portsTravel
TPT South AfricaTravel
TrygBFSI
Emirate NBDBFSI
VistaprintManufacturing
Valiant GroupManufacturing
Coop SwedenRetail
MorrisonsRetail
MauricesRetail

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