Connect with us

Company News

TCS – Q1FY22 First Cut, ICICI Securities

Tata Consultancy Services’ (TCS) results were below our estimates. The company’s revenues in the quarter was impacted by 14.1% QoQ decline in India revenues (impacted by Covid). In terms of revenue by geographies (in CC terms), North America grew 4.1% QoQ, UK & Continental revenues increased 3.6% QoQ & 1.5% QoQ and Middle East & Africa increased 4.2% QoQ partially offset by decline in India (down 14.1% QoQ). In terms of verticals, revenue growth was led by Manufacturing (up 4.8% QoQ), BFSI (up 3.1% QoQ), Life Sciences and healthcare (up 7.3% QQ), Communication & Media (up 1.7% QoQ), Technology & Services (up 5.0% QoQ) and Retail & CPG (up 4.4% QoQ) partially offset by 5.0% QoQ decline in regional markets & others. The attrition stood at 8.6% (up from 7.2% in previous quarter) and the company added 20,409 associates taking the total to 509,058. One of the key highlight was that the company’s deal pipeline continues to be healthy at US$8.1 billion (book to bill of 1.23x).

Q1FY22 Earnings Summary

  • Constant currency revenues grew 2.4% QoQ, below our estimate of 4.0%. US$ revenues grew 2.8% QoQ to $6,154.0 million, below our estimate of 4.2% QoQ growth and $6,240.5 million estimate
  • Rupee revenues grew 3.9% QoQ to | 45,411 crore (vs our estimate of | 46,043 crore)
  • EBIT margin declined 133 bps QoQ to 25.5% (vs our estimate of 25.8%) mainly led by wage hikes (170 bps) and increase in travel & other cost
  • PAT of | 9,008 crore was below our estimate of | 9,513 crore
  • TCS has declared a dividend of | 7 per share

The company is watchful of Covid situation and its impact on growth. We believe that the impact on India revenues will be reverted in coming quarters. Hence, we expect improving revenue trajectory and expect the company to achieve double digit revenue growth in FY22E. This coupled with healthy deal pipeline, and robust margins keep us positive on the stock from a longer term perspective. We would be revisiting our estimates and target price shortly.
CT Bureau

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!