TCS Q2 net down 6.8% to Rs 7,504 crore

Mumbai: Largest software exporter TCS on Wednesday reported a 6.87 per cent dip in the September quarter net at Rs 7,504 crore but said the demand has recovered faster than projected and will be sustainable going forward as well.

It had to set aside Rs 1,218 crore as provisions because of the trade secrets lawsuit filed by Epic Systems, if not the net profit would have grown 4.9 per cent to Rs 8,433 crore.

The board of the company, which is owned over 72 per cent by Tata Sons, also announced a Rs 16,000 crore buyback of shares. The management said it is in line with the capital return policy to give back between 80-100 per cent of free cash flows.

The company, which had decided to defer the regular salary hikes, announced that it will be implementing performance-based increments from October 1 onwards.

Revenues for the July-September period came at Rs 40,135 crore, up 3 per cent when compared to the year-ago period, and its chief executive and managing director Rajesh Gopinathan said the Rs 40,000 crore mark was reached one quarter ahead of what was expected at the start of the pandemic and stressed that the company is in the midst of a "sustainable demand recovery".

It is confident about the demand recovery, which "stands on stronger legs", but the prevailing economic climate and realities on the health front make it "cautious", Gopinathan said.

The operating margin expanded 2.2 per cent to 26.2 per cent on a year-on-year basis and Gopinathan said this has been two quarters ahead of expectations.