Last updated: 08 Jul, 2021 | 03:27 pm
Net Profit misses estimates: TCS has reported a 2.5% on-quarter drop in net profit to ₹9,008 crore in Apr-Jun 21 period, missing street expectations. Analysts had earlier estimated a net profit of ₹9,400 crore. The net profit margin fell to 19.8% from 21.2% in the previous quarter. On an yearly basis, the profit grew by 28.5%.
Revenue rises: TCS' revenue increased 3.9% on-quarter to Rs 45,411 crore in Apr-Jun 21, slightly below expectations. Analysts had anticipated a revenue of Rs 45,750 crore. On an yearly basis, the revenue increased 18.5%. Revenue in USD terms stood at Revenue in dollar terms stood at $6.154 billion. Revenue growth was aided by strong growth in Retail and Consumer Business, Communication, Life Sciences and Manufacturing. BFSI, which makes up 40% of total revenues grew by around 3.4%. The table below shows TCS’s revenue growth across verticals.
TCS quarterly results: Revenue growth across verticals
Margins under pressure: TCS’s margins came under pressure in the latest quarter as the full impact of wage hikes was felt in the quarter. Operating margin of the company fell 130 bps in the quarter to 25.5%. Net margin stood at 21.2%, up 1% over the last year.
Deal wins: The company managed to secure deal wins worth $8.1 billion in the quarter, a drop from record high quarterly deal wins of $9.2 billion in Jan-Mar 21. However, the deals wins are higher by 17.1% on YoY basis.
Attrition least in industry: TCS said that the attrition has fallen to just 8.6%, the lowest in the industry. Over 5 lakh associates and family members and over 70% of its associates have been vaccinated. TCS also saw highest ever quarterly net headcount addition of 20,409, taking the overall workforce strength to 509,058 employees.
Dividend: The board recommended an interim dividend of Rs 7 per share. This will be paid on 5th August, 2021. The company has fixed 16th July 2021 as the record date.
TCS Q1 results review: TCS has reported lacklustre numbers for Apr-Jun 21 period. While most international markets have recorded healthy growth on a QoQ basis, TCS’s India business revenue declined by 14% on-quarter due to the second wave of Covid pandemic. Further, the company’s margins have come under pressure due to wage and salary hikes and other discretionary spends.
However, the company has continued to report strong deal wins, helping it to cross the $6 billion milestone in quarterly revenue this quarter. While the ongoing pandemic has affected various businesses, it has forced a tectonic shift in business processes to move towards greater digitization. This has provided a good opportunity for the IT industry. Given its leadership position in the market, TCS is well-placed to take advantage of this shift.
The management has indicated that it is still gauging the impact of the emerging situation around a potential third wave in India, and new variants of Covid-19 across the world. However, it remains optimistic about the opportunities in its core markets and verticals.