TCS Q4 Results: Miss on bottomline; Company sees stable deal wins; declares dividend

TCS Q4 earnings
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Net Profit rises: TCS has reported a 1.6% QoQ rise in net profit to Rs 9,926 crore in Jan-Mar 2022 period. Analysts had earlier estimated a net profit of about Rs 10,067 crore. In the same period last year, the net profit was Rs 9,246 crore.

TCS results: Summary in brief

Revenue matches estimates: TCS' revenue increased 15.8% on-year and 2.9% on-quarter to Rs 50,591 crore in Jan-Mar 2022, in line with expectations. Analysts had anticipated revenue of Rs 50,263 crore. The revenue for FY22 was Rs 1,91,754 crore, up 16.8% YoY. In constant currency, the increase in revenue is 14.3% year-on-year (YoY).

Growth was led by Retail and CPG (22.1%), BFSI (+12.9%), and the Manufacturing vertical (+19%). Technology & Services grew +18%, Life Sciences and Healthcare grew +16.4% and Communications & Media grew +18.7%. 

Geographical Revenue: All Industry Verticals Grow Mid to High teens. Among major markets, growth was led by North America (+18.7%) and Continental Europe (+10.1%) while the UK grew by +13%. Among emerging markets, growth was led by Latin America (+20.6%) and India (+7%), followed by Middle East & Africa (+7.3%) and Asia Pacific (+5.5%).

Margins remain steady: TCS’s operating margin stood at 25%, similar to the last quarter’s. The net margins for Q4FY22 and the full year were stable at 20%.

TCS Quarterly Results: Highlights

Deal wins: TCS won new deals worth $11.3 billion in Q4FY22 against $7.6 billion in Q3FY22, taking the total deals to $34.6 billion ($23.3 billion in the first nine months) for FY22. The company added 10 clients to the $100 million+ bucket, 19 clients to the $50 million+ bucket, 40 clients to the $20 million+ bucket, and 52 clients were added to the $10 million+ bucket.

Attrition: TCS said that the attrition increased to 17.4% compared to 15.3% in the last quarter.  TCS added 35,209 employees on a net basis, the highest ever net addition in a quarter. Employee headcount stood at 592,195, a net addition of 103,546 during the year, another all-time high. 

Dividend: The board has declared a final dividend of Rs 22 per share for the fourth consecutive quarter. This will be paid on the fourth day from the conclusion of the 27th Annual General Meeting, subject to the approval of the shareholders of the Company.

TCS Quarterly Results: Outlook going forward

TCS has missed expectations on net profit, even as revenues came in line with estimates. The revenues have increased aided by all-round growth across business verticals and stable deal wins.  

The company noted that it is closing FY 22 on a strong note, with mid-teen growth and adding the maximum incremental revenue ever. Increasing participation in its customers’ growth and transformation journeys, and an all-time high order book provide a strong and sustainable foundation for continued growth ahead, said the CEO.  The share price ended 0.4% higher on Monday at Rs 3,699 per share.

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