TCS crosses $6-bn revenue mark in Q1
Misses earnings estimates; Profit up 28.5% to Rs 9,008 cr; highest-ever headcount addition in June quarter
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Tata Consultancy Services (TCS) kickstarted earnings season for the India Inc with a mixed set of numbers for the first quarter of current financial year. During the quarter, while core markets saw sound growth, Indian business got disrupted due to the deadly second wave of the pandemic.
During the quarter, TCS posted a 28.5 percent rise in its net profit at Rs 9,008 crore for the quarter ended June, 2021 as compared the same period of last fiscal. Its revenues grew 18.5 percent to Rs 45,411 crore a year ago.
In dollar terms, revenues of the firm were at $ 6.15 billion, a growth of 2.4 percent in constant currency term sequentially and 16.4 percent year-on-year basis.
"First quarter was a balance between health crisis and business opportunities. While core markets like the US and UK grew, our Indian business was impacted due to the second wave of Covid. However, we have seen growth revival in Indian business from end of June onwards but remain vigilant about the situation," said Rajesh Gopinathan, Chief Executive Officer and Managing Director of TCS.
"We crossed the $6 billion milestone in quarterly revenue this quarter. In addition to our annual salary increase and promotions, we undertook one of the largest vaccination drives in the private sector. Despite this and headwinds in regional markets, we expanded our Q1 operating margin year on year, reflecting the inherent resilience of our business model," said Samir Seksaria, chief financial officer, TCS
Gopinathan, however, remained optimistic about the double-digit revenue growth prospects of the company during this financial year. "Despite the one-off seen in Indian market, our strong deal pipeline and good growth in core markers gave us the confidence that we are on track for the double-digit revenue growth," Gopinathan said. The company saw its operating margin falling by 130 basis points at 25.5 percent over the last quarter, though it was 190 basis points higher than the same period last fiscal.
The Mumbai-headquartered firm reported another quarter of sound TCV (total contract value) of $8.1 billion during the April-June period.
During the first quarter, while North American market grew by 4.1 per cent quarter-on-quarter, the UK market witnessed a growth of 3.6 per cent in constant currency term. However,
"Indian market saw degrowth with our iON and public sector businesses getting affected due to the pandemic. Though we have seen revival from June end, we remain watchful about the situation," said Gopinathan said.
Among the verticals, BFSI (banking, financial services and insurance) came back strongly with 3.1 per cent growth in constant currency term (QoQ), while life sciences vertical grew 7.3 percent. "Our deals are widely diversified spreading across many sectors. We don't have much dependency on a few clients. BFSI and retail are leading the show in the deal signing space," said N Ganapathy Subramaniam, Chief Operating Officer at TCS. During the quarter, the company's employee headcount crossed the 500,000 mark with a final headcount of 509,058 employees as of June 30. The quarter saw a net addition of 20,409, which is its highest quarterly net addition ever. On the attrition side, IT services attrition rate (LTM) was at 8.6 per cent.
