The country's largest software services firm Tata Consultancy Services (TCS) on Monday reported a 7.3 percent year-on-year (YoY) jump in net profit at Rs 9,926 crore for the fourth quarter ended March 31, 2022.
In the corresponding quarter last year, the company posted a net profit of Rs 9,246 crore. CNBC-TV18 Polls had predicted a profit of Rs 10,050 crore for the quarter under review.
Total revenue for the quarter rose 16 percent YoY to Rs 50,591 crore from Rs 43,706 crore in the year-ago quarter. At the operating level, EBITDA stood at Rs 12,628 crore in Q4 FY22 over Rs 12,237 crore in Q3 FY22. EBITDA margin stood at 24.96 percent in Q4 FY22 as compared to 25.03 percent in Q4 FY22. EBITDA is earnings before interest, tax, depreciation and amortization.
TCS closed fiscal 2022 with a bang, crossing for the first time $25 billion annual revenue of Rs 1,91,754 crore, up 16.8 percent, driven by the highest-ever incremental revenue of $3.533 billion and an all-time high order book. Its annual profit jumped 14.8 percent to Rs 38,327 crore. On a sequential basis, the revenue grew 3.2 percent in constant currency terms.
"All verticals grew in the mid to high teens. Growth was led by retail and CPG (up 22.1 percent), manufacturing vertical (up 19 percent) and communications & media (up 18.7 percent). Technology and services grew (up 18 percent) and life sciences and healthcare grew (up 16.4 percent) while BFSI grew (up 12.9 percent)," the company said.
Coming to key markets, North America grew (up 18.7 percent), followed the UK grew (up 13 percent) and Continental Europe (up 10.1 percent). Among emerging markets, Latin America grew (up 20.6 percent), the Middle East & Africa grew (up 7.3 percent), India grew (up 7 percent), and the Asia Pacific grew (up 5.5 percent).
Rajesh Gopinathan, chief executive officer and managing director, said, "We are closing FY 22 on a strong note, with mid-teen growth and adding the maximum incremental revenue ever. Increasing participation in our customers’ growth and transformation journeys, and an all-time high order book provide a strong and sustainable foundation for continued growth ahead."
The Mumbai-based company announced a final dividend of Rs 22 per equity share of Re 1 each of the company which shall be paid/dispatched on the fourth day from the conclusion of the 27th Annual General Meeting, subject to the approval of the shareholders of the company.
N Ganapathy Subramaniam, chief operating officer and executive director, said: “It is immensely satisfying to close the year with robust, broad-based growth, industry-leading margins and the highest ever order book. During the year, we took on technologically challenging, industry-first transformational programs and brought to bear the full power of TCS’ capabilities and that of our partner ecosystem, to successfully deliver market-changing outcomes."
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As of March 31, 2022, the company has applied for 6,583 patents, including 187 applied during the quarter, and has been granted 2,287 patents. For the full year, TCS filed for 704 patents and was granted 437.
Samir Seksaria, Chief Financial Officer, said, "While continuing to make all the investments needed to support our growth aspirations, we managed the headwinds this year to deliver an industry-leading operating margin yet again. The successful completion of our fourth buyback in five years is another milestone in our shareholder-friendly approach to capital allocation."
In Q4, 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. The workforce continues to be very diverse, comprising 153 nationalities and with women making up 35.6% of the workforce.
Prakash Diwan, Market Expert, said, "There have been concerns in recent times related to flatness or pressure on margins. Also in a time when the reopening is likely to increase costs and hiring too has been fairly expensive as compared to budgets that they would have set aside. However, I am quite happy with 2.6 percent constant-currency growth because that was also likely to be tepid. So I see rerating on the stock which would continue. The momentum has been missing for quite some time except for the buyback-related spurt. However, I think it will start seeing some expansion on the PE multiple sides as well."
Moshe Katri MD, Wedbush Securities, said, "Spectacular growth on bookings. Everybody has been worried about margins and clearly, TCS has been able to offset rising wage inflation with a bunch of other measures. So I would commend them for that. The media has been trying to promote the narrative that IT spending is going to be impacted by a slowdown in Europe because of the political instability and because of rising oil prices. However, I think this is a scenario that is probably more relevant for a couple of quarters from now but as of now demand looks very strong and all the metrics continue to look very stable."
Ashis Dash, the Research Analyst at Sharekhan, said, "TCS Q4FY22 earnings are good on all fronts. It has also beaten our expectations on the revenue front, margins are in line with expectations. Also, deal wins remain very strong. So overall it is a very good quarter for TCS."
The results came after the close of the market hours. Shares of TCS ended at Rs 3,696.40, up by Rs 9.55, or 0.26 percent on the BSE.