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TCS: A lackluster performance at net level - Views on News from Equitymaster

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TCS: A lackluster performance at net level

Oct 18, 2011

TCS has announced the second quarter results of financial year 2011-2012 (2QFY12). The company has reported a 7.7% quarter-on-quarter (QoQ) growth in its sales and a 2.5% QoQ increase in its net profits. Here is our analysis of the results.

Performance summary
  • Net sales grew by 7.7% QoQ in 2QFY12, largely driven by 6.25% growth in volumes. For the half year ended September 2011 (1HFY12), sales grew by 28.1% Year-0n-Year (YoY).
  • Operating margins increased by 0.9% QoQ to 27.1% during the quarter as compared to 26.2% seen during the previous quarter (ending June 2011). This was mainly due to lower cost of sales (as a percentage of sales). However for 1HFY12, margins declined by 1.1% YoY as compared to the same period last year.
  • Higher operating margins led to a 2.5% QoQ growth in net profits. Profits would have been higher if not for the decline in other income as well as higher income tax expense during the quarter. For 1HFY12, net income increased by 20.8% YoY.
  • Added a net of around 12,580 employees during the quarter. Attrition rate currently stands at 13.7%, lower than the 14.8% seen during the previous quarter (1QFY12).
  • The company added 35 new clients during the quarter. The total number of active clients at the end of the quarter was 1,010.
  • Proposed an interim dividend of Rs 3 per share (yield of 0.3%).

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