TCS Interim Dividend | TCS Q2 Result and Share Buyback

TCS Interim Dividend and Q2 Results: Tata Consultancy Services Ltd. (TCS), India’s largest IT services company, reported its second quarter results for the financial year 2024 on October 11, 2023. The company posted a decline in its revenue in US dollar terms for the first time in more than four years, amid a challenging global business environment.

However, the company also announced a share buyback worth Rs 17,000 crore and an interim dividend of Rs 9 per share, rewarding its shareholders.

Here are the key highlights from the TCS Q2 results:

Revenue in US Dollar Terms Declines

TCS reported a revenue of $7.2 billion in US dollar terms, which was lower than the estimates of $7.28 billion from a CNBC-TV18 poll. The revenue declined by 0.2% quarter-on-quarter, compared to the expected growth of 0.75%.

This was the first time that TCS reported a decline in its revenue in US dollar terms since the April-June quarter of financial year 2020.

The company attributed the decline to the adverse impact of currency movements and lower demand from some of its key verticals such as banking, financial services and insurance (BFSI), retail and consumer business, and manufacturing.

Net Profit Beats Estimates

TCS reported a net profit of Rs 11,342 crore, which was higher than the expectations of Rs 11,162 crore from a CNBC-TV18 poll. The net profit grew by 3% quarter-on-quarter and by 8.6% year-on-year.

The company said that it was able to improve its profitability by leveraging its operating efficiencies, digital capabilities, and cost optimization measures.

The company’s operating profit or EBIT (earnings before interest and tax) stood at Rs 14,483 crore, which was also higher than the estimates of Rs 14,000 crore. The EBIT margin expanded by 110 basis points to 24.3%, compared to the estimates of 23.6%.

Deal Wins Stand at $11.2 Billion

TCS announced that it had won deals worth $11.2 billion during the quarter, which was an increase of 9.8% compared to the previous quarter.

The company said that it had witnessed strong demand across all its geographies and service lines, especially in cloud, data and analytics, cybersecurity, IoT (internet of things), and blockchain.

Some of the notable deals that TCS won during the quarter were:

  • A five-year deal worth £800 million with Jaguar Land Rover to provide digital transformation services
  • A deal worth £840 million with NEST (National Employment Savings Trust) to provide pension administration services
  • A multi-year deal with Equinor, a Norwegian energy company, to provide IT infrastructure and cloud services
  • A deal with Walgreens Boots Alliance, a global pharmacy retailer, to provide application maintenance and support services

Board Approves Share Buyback Worth Rs 17,000 Crore

TCS also announced its fifth share buyback in the last six years. The company will repurchase up to 4.09 crore shares, which is 1.12% of its total equity share capital, at a price of Rs 4,150 per share.

The total buyback consideration will be up to Rs 17,000 crore. The record date for the buyback has been fixed as October 19, 2023.

In 2022, TCS had repurchased shares from existing shareholders at Rs 4,500 per share in a buyback worth Rs 18,000 crore.

Board Declares Interim Dividend of Rs 9 Per Share

TCS also declared its second interim dividend of Rs 9 per share for the financial year 2024. The company had already declared dividends worth Rs 108 in the previous four instances.

The record date for the interim dividend has been fixed as October 19, 2023. The payment date for the interim dividend has been fixed as October 26, 2023.

Shares of TCS End Lower Ahead of Results

TCS Interim Dividend | TCS Q2 Result and share buyback
TCS share price

Shares of TCS were among the top losers on the Nifty 50 index ahead of its results. The stock ended 0.4% lower at Rs 3,647.80 on October 11, compared to a gain of over 100 points on the Nifty 50 index.

The stock has gained over 30% in the last one year, outperforming the Nifty IT index which has risen by over 25% in the same period. TCS is India’s most valuable company with a market capitalization of over Rs 13 lakh crore.

Leave a comment