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TCS misses Street expectations in Q1; top 7 highlights of June quarter scorecard

The company said growth in the quarter was led by cloud platform services, cybersecurity, analytics and insights and enterprise application services.

July 09, 2021 / 07:21 AM IST
 
 
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IT heavyweight Tata Consultancy Services (TCS) on July 8 reported its June quarter numbers which were slightly below the expectations of the market.

The company's profit figure stood at Rs 9,008 crore for the June quarter of the financial year 2022 (Q1FY22) against a CNBC-TV18 poll's estimates of  Rs 9,352 crore.

Revenue for the quarter came at Rs 45,411 crore against a CNBC-TV18 poll of Rs 45,777 crore.

Read more: TCS Q1 result: Net profit falls 2.6% to Rs 9,008 crore

In the corresponding quarter of the previous financial year, the profit and revenue of the company were Rs 7,008 crore and Rs 38,322 crore, respectively.

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The company said growth in the quarter was led by cloud platform services, cybersecurity, analytics and insights and enterprise application services.

Here are the top 7 highlights of TCS Q1 scorecard:

1. Hits and misses in numbers: Net income came at Rs 9,008 crore, down 2.6 percent quarter-on-quarter (QoQ), but up 28.5 percent year-on-year (YoY).

Revenue came at Rs 45,411 crore, up 3.9 percent QoQ, up 18.5 percent YoY. Constant currency revenue grew 16.4 percent YoY.

The operating margin stood at 25.5 percent which is up 1.9 percent YoY. Net margin came at 19.8 percent.

2. All verticals registered growth: All business verticals of the company grew during the June quarter, led by life sciences and healthcare (up 7.3 percent QoQ and 25.4 percent YoY).

Retail and CPG bounced back to double-digit growth, growing 4.4 percent QoQ and 21.7 percent YoY.

Other verticals such as BFSI (up 3.1 percent QoQ and 19.3 percent YoY), manufacturing (up 4.8 percent QoQ and 18.3 percent YoY), technology & services (up 5 percent QoQ and 12.3 percent YoY) and communications & media (up 1.7 percent QoQ and 6.9 percent YoY) also saw decent growth.

3. Indian market de-grew sequentially: The second wave of COVID-19 pandemic impacted Indian market growth in the June quarter. Indian market de-grew 14.1 percent QoQ but grew 25.3 percent YoY). The Asia Pacific grew 2.4 percent QoQ and 9.3 percent YoY.

However, North America (up 4.1 percent QoQ and 15.8 percent YoY), UK (up 3.6 percent QoQ and 16.3 percent YoY), Continental Europe (up 1.5 percent QoQ and 19.7 percent YoY), Latin America (up 4 percent QoQ and 16.1 percent YoY) and Middle East & Africa (up 4.2 percent QoQ and 25.3 percent YoY) registered decent growth during the quarter.

4. Employee headcount crossed the 500,000 mark: The company's employee headcount crossed the 500,000 mark in Q1, with 5,09,058 employees as of June 30.

With a net addition of 20,409 during the quarter, TCS registered its highest quarterly net addition ever.

IT Services attrition rate (LTM) was at 8.6 percent, the lowest in the industry.

5. Deal wins: The company sealed many deals during the quarter. Some of them were:

>> A deal with a US-based biopharmaceutical company, as its design and implementation partner for the integration of a recently acquired entity.

>> NORD/LB, one of the largest commercial banks in Germany has selected TCS as its strategic partner for IT Transformation.

>> Selected by Cummins Inc, for their global contact centre transformation programme for filtration business and sales transformation program.

>> Carnival Corporation, one of the world's largest travel leisure companies, has selected TCS as the Application Management Services (AMS) and System Integrator partner for their global HR system.

6. Management commentary: The company's management underscored that the COVID-19 has been a challenge but assured that the firm is well-positioned in core markets and verticals.

"Our business in North America, BFSI and retail all showed an appreciable growth which underlines the resilience of our operating model, the relevance of our offerings and above all, the passion and dedication of our associates," said Rajesh Gopinathan, Chief Executive Officer and Managing Director of TCS.

"Given the variants of the virus and fears of a potential third wave, we are watchful of the emerging situation and remain optimistic of the opportunities in our core markets and verticals. We are well-positioned and operating diligently to participate in them aggressively."

Samir Seksaria, Chief Financial Officer, said: "We crossed the $6 billion milestone in quarterly revenue this quarter. In addition to our annual salary increase and promotions, we undertook one of the largest vaccination drives in the private sector."

"Despite this and headwinds in regional markets, we expanded our Q1 operating margin year on year, reflecting the inherent resilience of our business model. Looking ahead, we stay focused on making the right investments to power our expansion in the growth and transformation opportunity, while sustaining our industry-leading profitability."

N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "We overcame the challenges posed by the second wave of COVID-19 in India taking some practical approaches and am satisfied that the delivery of all our client engagements was kept on track."

"We once again had a superior quarter with a TCV of $8.1 billion which is broad-based across markets and verticals. Our G+T themes are seeing traction in the market place and we are delighted to sign our largest SaaS deal ever for the TCS BaNCS Global Banking Platform on the cloud during the quarter."

7. Dividend: The board of directors has declared an interim dividend of Rs 7 per equity share of Rs 1 each of the company which will be paid on August 5, 2021. The record date for the purpose is July 16, 2021.
Moneycontrol News
first published: Jul 8, 2021 07:57 pm

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