TCS Q3 net rises 11% on cloud business, forex gains
Revenue expands 19.1% while operating margin narrows; headcount dips by 2,100 even as attrition edges lower
Tata Consultency Services Ltd. (TCS) reported third quarter net profit surged 11% year-on-year (yoy) to ₹10,846 crore, on the back of strong performance in its cloud busines, market share gain and currency support.
Revenue grew 19.1% to ₹58,229 crore. In constant currency, revenue expanded 13.5%. Operating margin narrowed 50 basis points to 24.5%.
The board announced a dividend of ₹75 per share including special dividend of ₹67 per share. The record date is January 17 and payment would be made on February 3..
Significantly, net headcount declined by 2,197 from the previous quarter. At the end of December, the company had a workforce totalling 6,13,974. Attrition dropped to 21.3% from 21.5%, after six quarters of uptick.
“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 U.K.,” said Rajesh Gopinathan, chief executive officer and managing director.
Asked about the dip in numbers, the company said it had focussed on productivity enhancement. “Our focus over the last few quarters on bringing in fresh talent at scale, training them on new technologies and making them productive is paying off,” said Milind Lakkad, Chief HR Officer.
“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,” he added.
N. Ganapathy Subramaniam, chief operating officer and executive director, said: “[In 2022] In a hybrid working model we delivered many complex transformation programmes tailored to the specific needs of our clients’ ecosystem with speed and agility.”
“It’s also refreshing to see our delivery centres and PacePort labs busy with our consultants and client executives jointly reimagining solutions to deliver the future, now. The year also saw us embracing data, AI and ML holistically to disrupt ourselves and drive competitive advantage to our clients’ businesses. All these augur well for our future as we step into 2023.”
Samir Seksaria, Chief Financial Officer, said: “Improved productivity, currency support and abating supply-side challenges helped expand our operating margin in Q3 compared with the previous quarter].”
“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,” he said.
During the quarter, segment-wise growth was led by Retail and CPG (18.7%) and Life Sciences & Healthcare verticals (14.4%). Communications & Media grew 13.5% and Technology & Services grew 13.6%. Manufacturing grew 12.5% while BFSI grew 11.1%.
Among major markets, North America and the U.K. led with 15.4% growth; Continental Europe expanded 9.7%. In emerging markets, Latin America sales rose 14.6%, India grew 9.1%, Asia Pacific climbed 9.5% and Middle East & Africa grew 8.6%.
Services growth was led by cloud, cybersecurity, consulting services and enterprise application services.
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