Tata Consultancy Services (TCS) on January 9 reported a 10.98 percent increase in its consolidated net profit at Rs 10,883 crore for the quarter ended December 2022 (Q3FY23). The company had posted a profit of Rs 9,806 crore in the year-ago period.
The consolidated revenue from operations came in at Rs 58,229 crore, up 19.11 percent against Rs 48,885 crore in the corresponding quarter of the previous fiscal.
The revenue beat expectations but the profit was below expectations.
In constant currency terms, the revenue rose 13.5 percent year-on-year (YoY), the company said, adding that growth was led by North America & UK, which rose 15.4 percent YoY. Operating margin stood at 24.5 percent – contracting by 0.5 percent YoY. Net margin came in at 18.6 percent.
In a seasonally-weak quarter, analysts had estimated the Tata group company to report 2.9 percent quarter-on-quarter (QoQ) growth in revenue, while net profit was projected to increase 7.8 percent QoQ in the October-December quarter.
The company also announced a dividend of Rs 75 per share including Rs 67 as a special dividend. The record date for dividends is January 17 and the payment date is February 3, 2023.
Order book for the quarter stood at $7.8 billion.
“We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and the UK,” said Rajesh Gopinathan, Chief Executive Officer and Managing Director, TCS. “The sustained strength of demand for our services is a validation of the value we provide to our clients in helping them differentiate themselves while enhancing their competitiveness. Looking ahead, and beyond current uncertainties, our longer-term growth outlook remains robust.”
TCS’ net headcount went down by 2,197 employees, the company said. Its last twelve-month IT Services attrition rate was at 21.3 percent.
“Improved productivity, currency support and abating supply side challenges helped expand our operating margin in Q3,” said Samir Seksaria, Chief Financial Officer, TCS. “This gives us greater confidence in our ability to steer our profitability towards our preferred range while continuing to invest in building newer capabilities to support our growth and market share gains.”
Commenting on the quarterly performance of the IT bellwether, Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas noted, “Management commentary on demand environment looks hazy for short to medium term owing to uncertain global environment. Management sounded more confident on demand recovery in North Americas and UK in the coming quarters, though Europe outlook remain uncertain.”
“At the current juncture, owing to multiple global headwinds outlook for FY24E looks uncertain, but recovery could be gradual in the coming quarters. Structural growth story for Indian IT sector remains intact, and TCS being the flagbearer would emerge stronger. Notwithstanding, near term volatility, we remain constructive on TCS for long term,” Hota added. Moneycontrol