TCS Q2 net up 46% to Rs 1,019 crore

Software major Tata Consultancy Services (TCS) today became the first Indian information technology company to cross the Rs 1,000-crore net profit mark in a quarter.

Its net profit for the quarter ended September 30, 2006, rose 46.84 per cent to Rs 1,019 crore from Rs 693.71 crore, beating estimates, as the company improved its margins and the demand for outsourcing grew.

Riding high on a strong volume growth of over 50 per cent in international revenue, the company's total revenue increased 52.30 per cent to Rs 4,495 crore from Rs 2951 crore. TCS' operating income, too, increased this quarter by 300 basis points due to offshore leveraging.

"There is tremendous scope to continue to increase our wallet share with our top 50 customers using our full-services model," CEO and Managing Director S Ramadorai said.

Last week, Infosys Technologies posted a 53.5 per cent rise in profit, handsomely beating street expectations.

The quarter has indeed been kind to TCS, which aims to be a $4 billion company by the end of the financial year. It added 58 new clients in the second quarter.

It had five deals of around $50 million each while its customers in the $1 million band increased from 258 to 274 this quarter.

The company's shares touched a lifetime high of Rs 1,148 on the Bombay Stock Exchange and closed 2.33 per cent higher at Rs 1,130.45, ahead of the quarterly results.

Quarter on quarter, the company's net profit was up 15.41 per cent while its total revenue was up 6.34 per cent, according to Indian generally accepted accounting principles for the quarter ended September 30, 2006.

The company's (US generally accepted accounting principles) total revenue was $975.43 million (Rs 4,483 crore), an 8.15 per cent quarter-on-quarter rise, and net income stood at $215.78 (Rs 991.82 crore), a 14.95 per cent increase.

Chief Financial Officer S Mahalingam said the company's margins had improved by almost 300 basis points.

"The company's integrated full-services model is driving growth with large customers, leading to a 50 per cent jump in the number of customers," said N Chandrasekaran, global head of sales and operations.

"We continue to be the employer of choice in this industry with the best retention rate, and this is helping us execute on the ground globally," said S Padmanabhan, global head of human resources. There was a gross addition of 8,919 (net 6,663) employees during the second quarter. In India, there were 3,764 campus hires and 4,200 lateral hires.

TCS continued to hang on to the lowest attrition rate in the industry at 10.6 per cent, including in business process outsourcing (10.6 per cent in the first quarter).

At the end of the second quarter, the total employee strength of the company was 78,028, with employees coming from 60 different countries.

Non-Indian nationals formed 8.3 per cent (7.3 per cent in the first quarter) of the total employee base and 25 per cent were women. 11,250 offers were made to candidates on campuses for financial year 2007-08.