TCS Q3 results report that profit rises to Rs 9,769 crore, revenue grows to Rs 48,885 crore

TCS Q3 results report that profit rises to Rs 9,769 crore, revenue grows to Rs 48,885 crore

The country India’s largest information technology services company, Tata Consultancy Services ( TCS ) , announced consolidated profit of Rs. 9,769 crores on Wednesday for the quarter ending 31 December 2021 (Q3FY22), an increase of 12% over Rs. 8,701 crores a year earlier.

According to reports, the Information Technology giant’s revenues from operations increased by 16% to 48,885 crores in the third quarter. This compares with Rs. 42,015 crores for the same period in 2017.

As compared to the year-ago period, the revenue increased 15.4% when measured in constant currency (CC).

According to the company, its revenue in the third quarter was $6,524 million, up 3% over the previous quarter.  

In 2021, the company expects to achieve $25 billion in annual revenue following the stellar Q3 performance.

As well, the company’s board of directors approved an amount of up to 18,000 crores for the share buyback.

At its meeting, TCS’ Board of Directors approved a proposal to buy back up to 4,00,00,000 equity shares for an aggregate amount up to 18 crore rupees, or 1.08% of the company’s total paid-up equity share capital, at 4,500 rupees per share, the company said in a regulatory filing. The proposal is subject to shareholder approval.

The price of the share will be repurchased at a premium of Rs. 643 to the current share price.

According to Ramesh Gopinathan, CEO and MD of TCS:  ” Our continued growth momentum is a testament to our ability to provide our customers with a collaborative, inside-out approach to transforming their businesses. ”

As well, TCS has declared an interim dividend of ₹7 per equity share.

On Wednesday, ahead of the results, TCS scrip closed 1.50% lower for Rs 3,857 per share on NSE. According to the latest figures, the shares have risen by 21.37% in the past year, underperforming the Nifty Information Technology Index, which rose by 25.02 per cent.

Customers appreciate our engagement model, our end-to-end capability, and our ability to solve problems, Gopinathan noted. We not only map out customers’ innovation and growth journeys but also help them execute new-age operating model transformations to support those journeys.

During the past year, the company has attracted 58 new clients with annual revenue of $100 million or more. Moreover, 21 companies with a revenue of $50 million or more have also joined the company.

The net cash from operations at the end of the quarter was 10,853 crore, equivalent to about 111.1% of the net income.

The attrition rate for TCS rose to 15.3% (voluntary TTM) based on a 12-month trailing period. Intending to combat this, TCS has hired 34,000 new graduates in the third quarter of this year, and 43,000 fresh graduates in the first half.

Recruiting and retaining top talent across the globe has been a key aspect of TCS’ success and a method of differentiating itself from its competitors. We continuously set new records in the talent acquisition area. As well as the 43,000 fresh graduates we hired in H1, we onboarded 34,000 fresh graduates in Q3 – which was higher than our full-year fresher hiring numbers in previous years. Milind Lakkad, the company’s Chief Human Resources Officer, said,  ” On the talent retention side, we continue to be the industry benchmark.

As of the end of the third quarter, the company employed 556,986 people. The company added 28,238 net new employees during the quarter.

 ” Our strategy of investing in our people, giving preference to internal candidates for the most interesting positions, installing global deployment opportunities, providing fast track career paths linked to education, and promoting over 110,000 employees, has helped us retain our best talent and overcome supply-side challenges, ”  Milind said.

India’s largest Information Technology company, Tata Consultancy Services (TCS), announced Wednesday its consolidated net profit for the quarter ended December jumped 12.3 per cent from Rs 8,701 crore in the same period last year to Rs 9,769 crore.

In the first quarter of this year, the company reported that its revenue from operations grew 16.3 percent year-on-year (YoY) to Rs 48,885 crore from Rs 42,015 crore.

Shareholders of TCS were paid a third interim dividend of Rs 7 per share. Dividends should be credited by February 7. The dividend record date is January 20 and the credit date is February 7.

Moreover, it announced share buybacks at Rs 4500 per share, representing a premium of 16.67 per cent over the company’s last traded price. Approximately Rs 18,000 crore worth of shares will be bought back by the company.

  ” We are continuing to focus on organic growth, as well as developing talents, methodologies, and tools to meet the evolving needs of technology companies. In addition, we are pleased to have crossed another milestone in our journey by crossing the $25 billion revenue mark in FY2021, ”  said N Ganapathy Subramaniam, Chief Operating Officer & Executive Director at TCS.

TCS said its operating margin for the quarter was 25 per cent, which was down 1.6 per cent YoY, as compared with its competitors who also saw a contraction of margin. It picked up 10 new $100 million-plus clients during the quarter, bringing its total to 58. It added 21 $50 million-plus clients, bringing its total to 118.

 

According to FICO, net cash from operations was Rs 10,853 crore, representing 111.1 percent of net income for the financial year ended March 31, 2016. This article stated that the company’s attrition rate on IT Services was 15.3 per cent, the lowest in its industry.

 

 ” Whilst the supply environment has been challenging, our sustained investments in our talent have helped us sustain strong growth, despite a challenging supply environment. We remain committed to long-term talent development, as well as to the implementation of tactical measures to eliminate churn. The TCS chief financial officer, Samir Seksaria, commented, . In the third quarter, we used a variety of operations levers to manage our employee expenses and mitigate the higher costs. ” .

The company, Tata Consultancy Sevices’s consolidated revenue, which increased 16.4 per cent over the past year, reached Rs 48,885 crore during the September-December period. Deal wins and an increase in digital spending by corporations helped the company achieve this growth.

The quarter’s USD revenue came in at USD 6,524 million, up 14.4 per cent from the same period last year and 3 per cent from the previous quarter.

A year-over-year growth rate of 15.4% was reported in constant currency, while a sequential increase of 4% was reported.

The first quarter of 2016 saw consolidated revenues of Rs 42,015 crore and the September quarter of 2016 saw revenues of R 46,867 crore.

In addition to adding 58 clients above, USD 100 million (+10 YoY); and 118 above USD 50 million (+21 YoY), the company added a strong client list with 118 additional clients above USD 50 million.

According to the Company, the company’s Total Contract Value (TCV) for Q3FY22 is USD 7.6 billion, up 12 per cent from USD 6.8 billion for Q3FY21. Total cumulative value of USD 23.3 billion year-to-date

The company’s continued growth momentum has been validated by the collaborative, inside-out approach we employ with our customers for their business transformation needs, said Rajesh Gopinathan, the firm’s Chief Executive Officer and Managing Director.

The organization’s engagement model, its end-to-end capabilities, and its can-do attitude regarding problem-solving are also well-liked by clients.

The Chief Operating Officer & Executive Director, N Ganapathy Subramaniam, commented on the results of the quarter, saying  ” We continued our focus on organic growth and on developing the talent, methodologies, and toolkits necessary to tackle ever-evolving technology challenges. ” .

Moreover, we are also delighted to reach another significant milestone as well in CY 2021, when we will reach $25 billion in revenue.

The company’s operating margins decreased marginally on-year to 25 per cent due to higher other expenses, which diminished the operating margin by 1.6 per cent on-year. In terms of other expenses as a percentage of revenue, they grew by 180 basis points (bps) compared to last quarter and by 80 bps from the prior quarter.

According to the company, the employee cost rose 16 per cent every year and 3 per cent on a sequential basis. Compared to the same period last year, employee costs as a percentage of revenue from operations were lower by 20 basis points, and by 70 basis points sequentially.

During the fourth quarter of 2016, the net margin was 20 percent, slightly down from 20.7 percent one year earlier.Net margins for the previous quarter were recorded at 20.5 per cent.

A mid-high teens-growth rate was returned across all business verticals at the company. A 20.4 per cent growth rate was recorded in Retail and Consumer Packaged Goods (CPG), which led the pack. A 16.9 per cent increase in manufacturing, a 17.9 per cent increase in Banking and Financial Services Industry (BFSI) and a 17.7 percentage increase in Technology & Services. During the same period, Communications & Media grew by 14.4 per cent, and Life Sciences and Healthcare grew by 16.3 per cent.

With regards to geography, North America continued to dominate, growing by 18 per cent, while Continental Europe followed closely at 17.5% while UK businesses gained 12.7%. Among emerging markets, Latin America led with a 21.1 per cent growth rate, followed by India at 15.2 per cent, followed by the Middle East & Africa at 6.9 per cent and the Asia Pacific at 4.3 per cent.

According to the company’s annual report for the year ended December 31, 2021, there were 556,986 employees, which represents an increase of 28,238 from December 31, 2020. This company achieved a new milestone in its diversity efforts in Q3, with the number of women employees crossing 200,000.

During the current quarter, the attrition rate increased from 11.9 per cent during the second quarter to 15.3 per cent.

To succeed in business, TCS has trained and retained top-quality talent all over the world. This is a source for competitive differentiation, according to Milind Lakkad, Chief Human Resources Officer.

In addition to the 43,000 fresh graduates hired in H1, 34,000 graduates were brought on board in Q3.

Investing in our people, giving preference to internal candidates for the most exciting open positions, offering global deployment opportunities, offering fast track career paths linked to learning, and promoting over 110,000 employees are some of the ways we have retained our best talent while overcoming supply-side challenges, Lakkad added.

In a buyback deal worth Rs 18,000 crore, the Board of Directors of the company purchased shares for Rs 4,500 per share.

 Dividends of Rs 7.0 per share are also to be paid to shareholders on February 7, 2022, with the record date on January 7, 2022.

During the close of business on January 12, TCS’ share price decreased by 1.4 per cent to Rs 3,859.90 on the National Stock Exchange. Over the last year, this fund generated returns of 21.6 per cent and 3.5 per cent for the current financial year. Shares of the company have recently traded up 6.1 per cent.

What is a share buyback?

A company repurchases its shares from investors or stakeholders through share buybacks or share repurchases. Investing in the stock market is often viewed as a tax-efficient method of returning capital to shareholders.

As a general rule, companies reduce their share price by repurchasing shares if they wish to increase market demand. The buyback of shares results in a reduction in the number of shares in circulation, which increases the value of the stock and earnings per share (EPS).

edited and proofread by nikita sharma