TCS Q3 Results meet estimates; Dividend, Buyback, Margins and more

Net Profit rises: TCS has reported a 12.4% on-year rise in net profit to Rs 9,769 crore in Oct-Dec 2021 period. Analysts had earlier estimated a net profit of about Rs 10,200 crore. In the same period last year the net profit was Rs 8,701 crore, while in Q2FY22 the net profit was Rs 9,624 crore. 

Revenue matches estimates: TCS' revenue increased 16.3% on-year and 4.3% on-quarter to Rs 48,885 crore in Oct-Dec 2021, in line with expectations. Analysts had anticipated revenue of Rs 48,545 crore. Growth was led by Retail and CPG (20.4%), BFSI (+17.9%) and the Manufacturing vertical (+18.3%). Technology & Services grew +17.7%, Life Sciences and Healthcare grew +16.3% and Communications & Media grew +14.4%. 

Geographical Revenue: All Industry Verticals Grow Mid to High Teens. Among major markets, growth was led by North America (+18%) and Continental Europe (+17.5%) while the UK grew +12.7%. Among emerging markets, growth was led by Latin America (+21.1%) and India (+15.2%), followed by Middle East & Africa (+6.9%) and Asia Pacific (+4.3%).

TCS Q3 earnings: Highlights

Margins remain steady: TCS’s operating margin stood at 25% almost similar to the last quarter’s. However, on a YoY basis margins declined by 1.6%. 

Deal wins: TCS has added 10 new clients in the $100 million-plus category, and there was an addition of 21 new clients in the $50 million-plus band. 

Attrition least in the industry: TCS said that the attrition increased to 15.3% compared to 11.9% in the last quarter. In spite of the increase, it is the lowest in the industry. TCS also saw the quarterly net headcount addition of 28,238, taking the overall workforce strength to 556,986 employees.  

Dividend: The board has declared an interim dividend of Rs 7 per share for the third consecutive quarter. This will be paid on 7 February 2022. The company has fixed 20 January 2022 as the record date. 

Buyback: The Board recommended a buyback of shares to the tune of Rs 18,000 crore at 4,500 per share. The value is at a premium of 16.67% over the last traded price of the stock.

TCS Quarterly Results review

TCS has reported Q3 results in line with street estimates for Oct-Dec 2021 period. The company has also continued to report strong deal wins.

According to the company, it will continue on growing organically and on developing the talent, methodologies, and toolkits for an ever-evolving technology landscape. “We are also delighted to cross another important milestone in our journey, hitting the $25 billion revenue mark in CY2021,” said TCS. 

It remains focused on long-term talent development as well as on tactical measures to mitigate the talent churn. The company said they have exercised various operating levers in Q3 to mitigate the higher costs and manage its employee expenses. The share price ended 1.5% lower on Wednesday at Rs 3857 per share.