TCS Q1 results: Net profit misses estimates, declares interim dividend
Premium- TCS Q1 results: The board of directors have declared an interim dividend of around ₹8 per equity share
Kicking off the earnings season, India's top IT company Tata Consultancy Services (TCS) on Friday reported a 5% increase in its net profit at ₹9,478 crore for the first quarter of the current fiscal, missed analyst estimates on higher expenses, as compared to ₹9,008 crore from the same quarter last where. However, the profit was down 4.5% sequentially from ₹9,926 crore recorded in the previous quarter ending March 2022.
The company's board of directors have declared an interim dividend of around ₹8 per Equity Share of ~1 each of the company, TCS said in the exchange filing.
TCS' revenue from operations for Q1FY23 came at ₹52,758 crore, up over 16% from ₹45,411 crore year-on-year (YoY), and a rise of about 4% quarter-on-quarter (QoQ).
Its Constant Currency (cc) revenue growth was up 15.5% YoY, whereas Q1 dollar revenue came at $6,780 million, up 10% from the year-ago quarter.
Operating margin for the quarter stood at 23.1%, down from 25.5% year ago, mainly due to impact of annual salary increase, elevated cost of managing the talent churn and gradually normalizing travel expenses, company said. Its order book stands at $8.2 billion.
Growth was led by retail and CPG (25.1%), Communications & Media (19.6%), Manufacturing vertical (16.4%) and Technology & Services (16.4%). BFSI grew 14% while Life Sciences and Healthcare grew 12%.
Among major markets, North America led with 19% growth, Continental Europe 12% and UK 12.6%. In emerging markets, India grew 20.8%, Asia Pacific 6.2%, Latin America 21.6%, and Middle East & Africa 3.2%.
“We are starting the new fiscal year on a strong note, with all-round growth and strong deal wins across all our segments. Pipeline velocity and deal closures continue to be strong, but we remain vigilant given the macro-level uncertainties. Looking ahead, we remain confident in the resilience of technology spending and the secular tailwinds driving our growth," said Rajesh Gopinathan, Chief Executive Officer and Managing Director.
The company added 14,136 employees for the first quarter of the current financial year, but its attrition continued to inch up to 19.7%. TCS’ workforce stood at 606,331 as on 30 June, 2022.
The company gradually accelerated its return to office program in Q1, with about 20% of the workforce now working from office. IT services attrition was 19.7% on the last twelve months’ basis.
“TCS missed street expectations in Q1 earnings as margins are under pressure and the attrition rate is still high. However, the counter headed in its Q1 earnings with tepid expectations therefore there is no knee jerk reaction expected while buying can be seen at lower levels," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Shares of TCS closed 0.6% lower at ₹3,264 apiece on the BSE ahead of its Q1 results. The IT stock is down about 15% in 2022 (YTD) so far as compared to an 8% fall in benchmark Sensex.