TCS Q1 Results: Revenue Up, But Profit Falls, Margin Narrows Sequentially

Tata Consultancy Services Ltd.’s revenue rose for the fourth straight quarter on deal wins as clients continued to spend on digital services during the pandemic. India's largest software services provider stuck to its double-digit growth guidance for the ongoing fiscal.

Deal wins and client investment towards cloud computing, artificial intelligence and internet of things have helped the Indian IT companies rebound during the pandemic. They had seen costs rise and lost billings as trade stalled when the Covid-19 pandemic struck last year.

Margin Picture

The full impact of salary hike was seen in the first quarter for the company. TCS' operating margin narrowed to 25.5% from 26.8% in the preceding quarter.

Wages and salary hikes had a 170-basis-point impact on margin, partially offset by exchange rate gains of around 30 basis points, said Samir Seksaria, chief financial officer, TCS, said. Quite a few discretionary spends returned in the first quarter, he said, and most will be back in the next few quarters. Travel may take some more time.