IT major Tata Consultancy Services’ profit grew 8.3 per cent to ₹10,431 crore in the second quarter of the current fiscal versus ₹9,624 crore reported in the same period last year.
“In terms of profitability, we hit a milestone, crossing ₹10,000 crore for the first time ever,” said Rajesh Gopinathan, CEO of TCS.
The profit witnessed a sequential uptick of 10 per cent, from ₹9,478 crore reported in the first quarter of FY23.
Revenue from operations grew year-on-year by 18 per cent to ₹55,309 crore in Q2 FY23 against ₹46,867 crore reported during the corresponding period last year.
The IT major saw some recovery sequentially in its operational margins, reporting a margin of 24 per cent for Q2 FY23 versus a margin of 23.1 per cent reported in the previous quarter.
TCS has not reached its target margin band of 25 per cent which the IT company was consistently reporting till Q4 FY22.
Chief Financial Officer Samir Sheksaria said the depreciation in the value of rupee and improved operational resulted in higher operational margins.
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The company reported an order book of $8.1 billion for Q2 FY23, which is similar to $8.2 billion reported in Q1 FY23.
However, the IT major did not score any milestone deal this quarter. The total deal value stood at half a billion dollars during the reporting period, with the largest deal secured by the company was around $400 million.
“We have reported a very strong quarter with good demand resilience. Our distributed portfolio along with our ability to stay relevant is contributing to this,” Gopinathan added.
N Ganapathy Subramaniam, Chief Operating Officer of TCS, highlighted that some extent of deal softening will be there in the long term horizon.
“There is some softening in terms of long-term deals. Europe is still looking to see how its winter is going to be; so some softness can be expected in the BFSI sector and insurance (on the PnC side) in the case of North America,” he noted. However, according to Subramaniam, the strong execution of an already robust order book aided in improving financials for the IT major.
Attrition in the LTM IT services rose to 21.5 per cent, from 19.70 per cent reported in the previous quarter. However, according to Milind Lakkad, Chief HRO, TCS, attrition has peaked and will reduce from the second half of the FY23.
Lakkad cautioned that the rate of decrease in attrition will not be too high in the initial quarters.
Lakkad further said the company has already recruited 35,000 freshers so far and will be adding another 10,000-12,000 new recruits this fiscal.
The company reported 10,000 net additions this quarter. Gopinath further noted that company’s supply-side constraints have mostly been resolved.
