India's largest software exporter Tata Consultancy Services (TCS) reported a strong set of numbers, raising expectations for the second quarter earnings of other IT companies scheduled to be announced in the next fortnight. TCS registered a sequential dollar revenue growth of 7.2 per cent in the second quarter of FY21. In constant currency terms the company registered a 4.8 per cent growth quarter-on-quarter. The operating margin stood at 26.2 per cent, an expansion of 290 basis points over the last quarter.
With the total value of the deals signed for the quarter standing at $8.6 billion dollars, "we are in the midst of sustainable demand recovery when we look at our conversations with the customers and our current and expected pipeline going forward," said Rajesh Gopinathan, CEO and MD, TCS. At the end of the first quarter the company had stated that it expected a flattish recovery by Q3.
Sequentially in constant currency terms BFSI vertical grew 6.2 per cent while Retail & CPG grew by 8.8 per cent and Life Sciences & Healthcare by 6.9 per cent. Rajesh said the growth for the quarter was not just broad based, across all their customers, but also the technology investments made by the company gave an edge in the current scenario where technology transformation for customers is a priority. The company also announced the resumption of appraisal cycle staring this month for its employees, and can be expected to be broadly in the range of hikes rolled out in the previous year.
During the quarter the TCS added a net headcount of 9,864 people including 7,000 freshers. While Gopinathan did not give a definitive outlook for the third quarter, "the seasonal weakness of Q3 is likely to continue and if at all it might be a bit more exaggerated in a few verticals or a few regions which will be offset by some amount of demand momentum that we are seeing," he further added.
TCS also announced a buyback of 1.42 per cent of its total paid up equity share capital with value not exceeding Rs 16,000 crores, and an interim dividend of Rs 12 per share. The company also announced the elevation of Samir Seksaria as Chief Financial Officer Designate, who would take over from the current Chief Financial Officer Ramakrishnan V effective May 1, 2021, post his retirement. Seksaria is currently the Vice-President Finance of the company.