Recommended ArticlesView All
Delhi fails to get a mayor for third time — What's the issue and what happens next
Feb 6, 2023 IST4 Min(s) Read
India opposes Hindustan Zinc's buyout of Vedanta's global zinc assets: Exclusive
Feb 6, 2023 IST2 Min(s) Read
Vodafone-Idea Saga — Three parents but none to love
Feb 6, 2023 IST6 Min(s) Read
World Cancer Day 2023: Early detection is crucial for reducing the global burden
Feb 4, 2023 IST5 Min(s) Read
Tata Consultancy Services (TCS) reported results that beat estimates on most fronts, led by strong demand across verticals, led by retail and CMI (communications, media and information). Net profit for the September quarter crossed the Rs 10,000 crore mark for the first time to Rs 10,431 crore, surpassing expectations of Rs 10,248 crore.
The Mumbai-based technology behemoth of the Tata Group reported revenue growth of 1.2 percent in US dollar terms. The figure of $6,877 million was in-line with a CNBC-TV18 poll of $6,870 million.
Revenue in rupee terms also increased 4.8 percent over the June quarter to Rs 55,309 crore, higher than consensus estimates of Rs 54,905 crore.
For the September quarter, TCS grew 4 percent in constant currency terms, higher than the CNBC-TV18 poll of 3.4 percent.
Among the segments, most of the segments grew between low to mid-single digits compared to the June quarter. BFSI saw growth of 4.3 percent quarter-on-quarter in constant currency terms. BFSI contributes nearly 40 percent to the company's overall revenue.
Orderbook for the September quarter remained flat at $8.1 billion, compared to $8.2 billion during the June quarter. Managing Director and CEO Rajesh Gopinathan said that the company has no reason to change their quarterly deal win guidance of $7 billion to $9 billion.
The management continues to maintain that while there is an increasing sense of caution in discussions but the same has not translated in their order pipeline.
Operating profit, or EBIT, which is the company's earnings before the deduction of tax, increased 9 percent quarter-on-quarter to Rs 13,279 crore. A CNBC-TV18 poll estimated the figure to be at Rs 13,079 crore.
EBIT margin expanded 90 basis points from the June quarter to 24 percent. The poll expected TCS' margin to increase 70 basis points from the previous quarter to 23.8 percent. Out of the 90 basis points improvement, 50 basis points came from a depreciating currency, which was partly offset by other cross-currency headwinds.
Chief Financial Officer Samir Seksaria said that the company is progressing towards achieving their operating margin priorities for the year, adding that headwinds from the supply-chain challenges are abating. "That sets up well for the seasonally weak second half of the year," he said.
TCS added close to 10,000 employees during the September quarter with the total headcount now at 6.16 lakh. Attrition over the last 12 months now stands at 21.5 percent, compared to 19.7 percent during the June quarter.
The management said that while attrition will come down on a quarter-on-quarter basis, they did not specify an exact quantum for the same.
Experts on the street believe that the results are better than what was feared earlier. Moshe Katri of Wedbush Securities said that while he is unsure of client budgets for next year being cut, but there may be some slippages in budget by a month or two.
Speaking to the media, CEO Gopinathan said that the company will get to know of the client budgets for next year over the next three to six months.
Market expert Prakash Diwan called the results "very positive," adding that costs peaking out in the June quarter aided margin improvement in the September quarter.
Shares of TCS had ended 1.9 percent higher on Monday, ahead of the company's earnings.