TCS' Q4 ended well on recovery in demand; top 8 highlights of March quarter scorecard

Indian IT heavyweight Tata Consultancy Services (TCS) reported healthy March quarter earnings on April 12, ending the financial year 2021 on a strong note.

The company's Q4 net profit at Rs 9,246 crore was 14.9 percent higher year-on-year (YoY) from Rs 8,049 crore in Q4FY20. This was, however, slightly below the market expectations as a CNBC-TV18 poll had estimated the company's profit at Rs 9,317 crore for the quarter.

Read more: TCS Q4 profit jumps 6.3% to Rs 9,246 crore

"I am very pleased with our performance in Q4," said V Ramakrishnan, Chief Financial Officer of the company, adding, "this caps three-quarters of consistently robust performance in a pandemic year, and gives us a strong exit from FY21."

"Our Q4 margins are a validation of our strong belief that it is possible to win mega-deals, post-industry-leading growth, continue to invest in our people and in newer capabilities, and still deliver industry-leading profitability. All the investments that we have been making over the years position us strongly to expand our footprint in the large growth and transformation opportunity," said Ramakrishnan.

1. Key numbers: Owing to the ramp-up of large deals, cross-currency tailwind and recovery in demand, the March quarter ended on a healthy note for the company.

The company saw a 6.3 percent sequential growth in March quarter consolidated profit at Rs 9,246 crore.

Consolidated revenue during the quarter grew by 4 percent to Rs 43,705 crore. The revenue in dollar terms grew by 5 percent sequentially to $5,989 million.

EBIT at Rs 11,734 crore grew 4.9 percent QoQ while ENIT margin rose 20 bps QoQ to 26.8 percent.

2. All verticals log gains sequentially: The company's all verticals showed good sequential growth; however, some of them lagged on a yearly basis.

BFSI grew 7 percent QoQ and 13.3 percent YoY whereas the retail and CPG segment grew 4 percent QoQ but declined 0.9 percent YoY. Similarly, communications and media grew 1.8 percent QoQ but declined 4 percent YoY.

The rest, such as life sciences and healthcare (up 3.8 percent QoQ and 19.3 percent YoY), manufacturing (up 3.9 percent QoQ and 1.3 percent YoY) and technology and services (up 2.8 percent QoQ and 3.9 percent YoY) ended the quarter on a positive note.

On a full-year basis, life sciences and healthcare (up 17.1 percent), BFSI (up 2.4 percent) and technology and services (up 0.2 percent) showed growth while the rest continue to be below prior-year levels, TCS said.

3. Europe, North America lead market growth: All major markets showed sequential as well as yearly growth. Continental Europe (up 8.5 percent QoQ and 11.7 percent YoY) and North America (up 3.9 percent QoQ and 5.9 percent YoY) led among geographies sequentially.

UK market (up 3.4 percent QoQ and 1 percent YoY), Middle East and Africa (up 4.2 percent QoQ and 10.6 percent YoY), India (up 2.8 percent QoQ and 11.2 percent YoY), Latin America (up 2.5 percent QoQ and 1.5 percent YoY), and Asia Pacific (up 1 percent QoQ and 1.5 percent YoY), all ended well.

However, on a full-year basis, with the exception of Continental Europe which grew 5.5 percent, all other markets continue to be in negative territory compared to the prior year, TCS said.

4. Deal wins: The company entered into several strategic partnerships and deals in the March quarter of FY21. Some of them included a strategic partnership with Honeywell Inc in their supply chain processes transformation programme.

SODEXO SA, a global leader in services, selected TCS as its strategic partner for its IT@Sodexo transformation journey towards next-generation application management services.

5. Strong order book: TCS' order book at $9.2 billion in Q4FY21 was the highest-ever total contract value (TCV) in a quarter, taking the total yearly order book to $31.6 billion, a 17.1 percent growth compared to the previous financial year. Its TCV in Q3FY21 was at $6.8 billion.

6. Dividend: The board of directors recommended a final dividend of Rs 15 per share of Rs 1 each which shall be paid/dispatched on the fourth day from the conclusion of the annual general meeting.

7. Human resource: TCS added 19,388 employees to its rolls on a net basis in Q4, which was the highest-ever net addition in a quarter.

The total headcount stood at 4,88,649, a net addition of 40,185 during the year. IT services attrition rate (LTM) was at 7.2 percent.

8. Growth top agenda for FY22: On expected lines, the company's management signalled TCS will keep growth in focus by leveraging its position in the market.

"Our investments over the last decade in building newer capabilities, and in research and innovation, position us well for the multi-year technology services opportunity ahead," said Rajesh Gopinathan, Chief Executive Officer and Managing Director.

"While we continue to dominate in our traditional areas of strength, we are making good progress in gaining share in the growth and transformation opportunity. Our focus going into FY22 will be to engage with clients in their growth agenda, propelled by innovation and leverage of collective knowledge," he said.

In a separate BSE filing, the company announced the appointment of Samir Seksaria as Chief Financial Officer, effective May 1, 2021, to take over from Ramakrishnan V, who would be retiring from the company effective April 30, 2021.