Tata Consultancy Services (TCS) on October 10 reported a consolidated net profit of Rs 10,465 crore for the quarter ended September 2022, registering an 8.41 percent year-on-year (YoY) growth from Rs 9,653 crore logged in the corresponding quarter of the previous year.
Kicking off the earnings season for the information technology sector, the country's largest IT services provider said sequentially, the profit rose 9.93 percent.
TCS said the revenue from operations grew by 18.01 percent YoY to Rs 55,309 crore compared to Rs 46,867 crore in the same quarter last year. Sequentially, revenue grew 4.83 percent.
In constant currency terms, revenue growth was 15.4 percent YoY. The company said its operating margin came in at 24 percent, contracting 1.6 percent YoY. The company’s order book for the quarter was at $8.1 billion. Net cash from operations came in at Rs 10,675 crore or 102.3 percent of net income, the company said.
“Demand for our services continues to be very strong,” said Rajesh Gopinathan, Chief Executive Officer and Managing Director, TCS. “We registered strong, profitable growth across all our industry verticals and in all our major markets. Our order book is holding up well, with a healthy mix of growth and transformation initiatives, cloud migration and outsourcing engagements.”
TCS also announced a dividend of Rs 8 per share. The record date for the same is October 18 and it will be paid on November 7.
“This was another quarter of excellent execution that saw us delivering several transformational projects like the largest migration of 2.3 million policies to our TCS Insurance platform in one go in the UK or the trading platform at the Gift City," said N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, TCS.
Segment-wise, growth was led by Retail and CPG (22.9 percent), Communications & Media (18.7 percent), and Technology & Services (15.9 percent). Manufacturing as well as Life Sciences & Healthcare verticals grew 14.5 percent, while BFSI grew 13.1 percent.
Market-wise, North America led with 17.6 percent growth; Continental Europe grew 14.1 percent and the UK grew 14.8 percent. In emerging markets, India grew 16.7 percent, Latin America grew 19 percent, Middle East & Africa grew 8.2 percent and Asia Pacific grew 7 percent.
TCS said net hired 9,840 new employees during the quarter, taking the total workforce strength to 6,16,171. It said women's share in the workforce was 35.7 percent. The last twelve-month attrition rate was 21.5 percent.
"We believe our quarterly annualized attrition has peaked in Q2 and should see it taper down from this point, while compensation expectations of experienced professionals moderate,” said Milind Lakkad, Chief HR Officer, TCS.
"We believe that IT Services would not remain immune to worsening global macros in terms of rising inflation, economic slowdown, currency headwinds and likely cut on spending," said Mitul Shah - Head of Research at Reliance Securities.
"Revenue growth would taper down to low double digit in FY24E, while QoQ decline in order book, clear lower employee addition, higher attrition and lower pricing power ahead would lead to valuation multiple contraction close to its historical averages. Therefore, at present we have SELL rating on TCS."
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