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Positives: Brexit Impact

TCS reported a 4.5% increase in net profit for Q2. New clients were added and EBITDA margins expanded. The attrition rate fell to its lowest in 3 years. Geographical growth was seen in Europe and Asia Pacific, while growth was led by the life sciences and healthcare verticals. However, net sales declined slightly by 0.1% quarter-over-quarter. Brexit could negatively impact Indian IT companies by increasing costs as they may need to establish separate UK and EU offices and teams. The weakness of the British pound from Brexit also poses risks.

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48 views

Positives: Brexit Impact

TCS reported a 4.5% increase in net profit for Q2. New clients were added and EBITDA margins expanded. The attrition rate fell to its lowest in 3 years. Geographical growth was seen in Europe and Asia Pacific, while growth was led by the life sciences and healthcare verticals. However, net sales declined slightly by 0.1% quarter-over-quarter. Brexit could negatively impact Indian IT companies by increasing costs as they may need to establish separate UK and EU offices and teams. The weakness of the British pound from Brexit also poses risks.

Uploaded by

Vijesh Mv
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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N Chandrasekaran, MD & CEO

Positives
TCS reports 4.5% jump in Q2 net profit (PAT)-6603 CRORE
The company added one new client in $50 million-plus category and six others in $20 million-plus category
Ebitda margins for the quarter expanded to 26 per cent in Q2FY17 against 25.1 per cent in Q1FY17.
It has been a good quarter from a profitability perspective where despite multiple headwinds our disciplined
approach and focus on operations has helped us deliver a strong margin performance
Attrition rate fell to 11.9%,best in 3 years.
The company announced dividend of Rs 6.50 apiece.
TCS said its digital revenue grew
Tata Consultancy Services recognised as UK's top employer -CS has a UK workforce of over 11,000
employees based across 30 locations
Geographical Growth: For the quarter, Europe saw a growth of 3.7 per cent and Asia Pacific at 3.5 per cent
sequentially in constant currency terms. North America grew by 1.4 per cent sequentially while the UK
remained flat.
India business declined by 7.6 per cent sequentially and Latin America also continued to show volatility.
Business growth: During September quarter, growth was led by Life Sciences and Healthcare verticals,
which grew by 4.7 per cent sequentially in constant currency followed by Energy and Utilities, which rose
3.6 per cent.
Other verticals such as Manufacturing grew by 3.1 per cent, Travel & Hospitality saw a growth of 2.3 per
cent and Communication & Media grew by 2 per cent sequentially for the quarter ended September 30.
Hitbacks
The largest IT firm by revenues on Thursday said its net sales for the quarter stood at Rs 29,284 crore, down
0.1 per cent QoQ from Rs 29,305 crore sales it reported in June quarter.
TCS stock declined 2.17 per cent to settle at Rs 2,328.50
We are as much a global company as anyone else and we have a strong presence in the US -- not only in
terms of our customers base but also in terms of employee base.
company is focusing on tight cost management at a time when the growth is slowing. In the September
quarter, while revenue was below expectation, operating margin at 26% was better than what analysts had
anticipated despite unfavourable cross currency movement.
Growing uncertainties in the environment is creating caution among customers and resulted in holdbacks in
discretionary spending this quarter

BREXIT IMPACT
Europe is the second-largest market for Indias $146 billion IT outsourcing industry, generating around 30%
of its revenue.
Indian companies could arise from the volatility of the British pound, uncertainty about future policies
between the UK and Europe, and changes in financial and banking systems.

Indian IT companies may need to establish separate offices and hire different teams for the UK and the EU
after the fallout, putting heavy expenditure burden on IT companies in the near-term, Nasscom said.
Shares of most Indian IT companies fell June 23.
The immediate fallout for Indian IT companies would be due to the weakness and volatility in the British
pound.

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