Tata Consultancy Services Ltd (TCS), India’s largest IT services company and the second most valuable firm, on April 11 reported a consolidated net profit of Rs 9,926 crore for the fourth quarter ended March 2022, registering a 7 percent on-year growth. On a sequential basis, the growth in profit is 2 percent.
The company had reported a consolidated profit after tax (PAT) of Rs 9,246 crore in the corresponding quarter last year. In the December quarter, its PAT stood at Rs 9,769 crore.
The consolidated revenue for TCS during the January - March period stood at Rs 50,591 crore, up 16 percent from the year-ago quarter, aided by all-round growth across business verticals, stable deal wins and an increase in transformation spends by corporates. Revenue has increased by 3 percent on a quarterly basis. In constant currency, the increase in revenue is 14.3 percent year-on-year (YoY).
The company had reported consolidated revenue of Rs 43,705 crore in the corresponding quarter a year ago. Its revenues during the October-December period came in at Rs 48,885 crore.
For the full year period (April-March 2022), the consolidated profit was recorded at Rs 38,327 crore, which is a growth of 18 percent from a profit of Rs 32,430 crore reported for FY21.
Consolidated revenue for FY22 stood at Rs 1,91,754 crore, a 17 percent rise from the revenue of Rs 164,177 crore reported for FY21. In constant currency, the growth in revenue was 15.4 percent on year.
Though the supply side issues created headwinds for the industry as a whole, demand continued to be strong during the quarter as well as the full year across all markets, industries, and services, with growth led by Cloud, Cyber Security, Enterprise Application Services and IoT & Digital Engineering, the company said in its earnings release.
“We are closing FY22 on a strong note, with mid-teen growth and adding the maximum incremental revenue ever”, said Rajesh Gopinathan, Chief Executive Officer and Managing Director. “Increasing participation in our customers’ growth and transformation journeys, and an all-time high order book provide a strong and sustainable foundation for continued growth ahead”, Gopinathan added.
Deal Wins
The company recorded its highest ever order book TCV (total contract value) of $11.3 billion during the quarter, taking the total deal TCV value to $34.6 billion for FY22.
Business Performance
Verticals
All verticals of the business grew in mid to high teens during the quarter. Retail and CPG (consumer product group) grew the most at 22.1 percent due to the opening up of economic activities post the Omicron scare. Manufacturing vertical witnessed a growth of 19 percent while Communications & Media returned a growth of 18.7 percent. Technology & Services vertical grew by 18 percent; Life Sciences and Healthcare grew 16.4 percent during the quarter while BFSI grew by 12.9 percent.
On a full year basis, Retail and CPG led the pack with a growth of 20.6 percent, Manufacturing rose 19.4 percent, Life Sciences and Healthcare grew by 19.2 percent, BFSI witnessed a growth of 16.7 percent, Technology & Services grew by 15.8 percent while Communications & Media grew by 14 percent.
Geographies
The largest market of the company, the North America witnessed a healthy growth of 18.7 percent during the quarter while UK and Continental Europe grew by 13 and 10.1 percent, respectively. Among the emerging markets, strong growth of 20.6 percent was witnessed in Latin America while Middle East & Africa grew by 7.3 percent. The company’s business in India witnessed a growth of 7 percent and Asia Pacific market returned with a growth of 5.5 percent.
Full year growth for North America stood at 17.5 percent, for Continental Europe it was 15.1 percent while for UK, the full year growth stood at 14.3 percent. The emerging markets except Asia Pacific witnessed a double-digit growth in mid-high teens.
Margins
The gross margins for the company during Q4FY22 and FY22 stood at 40 percent which was a decline of 100 bps, both on a quarterly and on full year basis. The gross margins in Q4FY21 and FY21 were registered at 41 percent.
The impact of supply side pressures was evident in the operating margins for the quarter which declined by 200 bps to 25 percent compared to the same period a year ago. On a full year basis, the decline was even more pronounced as the operating margins tanked 800 basis points to 22 percent compared to 30 percent for FY21.
“While continuing to make all the investments needed to support our growth aspirations, we managed the headwinds this year to deliver an industry-leading operating margin yet again”, said Samir Seksaria, Chief Financial Officer.
The net margins for the quarter and full year were stable at 20 percent.
Client Matrix
During the year, the company added 10 clients to the $100 million+ bucket; 19 clients were added to the $50 million+ bucket; 40 clients added to the $20 million + bucket and 52 clients were added to the $10 million+ bucket.
Human Resource
During the quarter as well as the year, the company witnessed its highest ever net addition to its workforce. The company added 35,209 employees on a net basis during the quarter. Total employee headcount at the end of the year stood at 592,195 which is a net addition of 103,546 employees during the year. Women employees now constitute 35.6 percent of the workforce.
The company continued to face employee related challenges as its IT services attrition climbed to 17.4 percent at the end of the year.
“With the highest ever net addition this year, consistently highest talent retention, benchmark talent development metrics, continued focus on health and well being and numerous industry awards, we have reaffirmed TCS’ position as the #1 employer of choice”, said Milind Lakkad, Chief HR Officer.
Dividend
TCS has recommended a final dividend of ~Rs 22 per equity share of Re l each. The proposed final dividend shall be paid on the fourth day from the conclusion of the 27th Annual General Meeting, subject to approval of the shareholders of the Company.
The TCS stock closed with a gain of Rs 10.75 at Rs 3,696.4 on April 11 at the National Stock Exchange. The stock has appreciated 2.7 percent in the past one month and has generated returns of 11.3 percent during the past one year.
