TCS Q4 Results: Revenue Rises For Third Straight Quarter, Margin Improves

Tata Consultancy Services Ltd.'s revenue rose for the third straight quarter as clients continued to spend on digital services amid the pandemic and on deal wins. That helped it to maintain double-digit growth revenue guidance for the fiscal ending March 2022.

Revenue of India's largest software services exporter rose 4% over the preceding quarter to Rs 43,705 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 43,551-crore consensus estimate of analysts tracked by Bloomberg.

• Revenue in dollar terms increased 5% sequentially to $5,989 million.
• Revenue in constant currency terms rose 4.2% sequentially.
• FY21 top line grew 4.6%.

Other Highlights (quarter-on-quarter):

• Q4 net profit rose 6.26% to Rs 9,246 crore, compared with the Rs 9,276-crore estimate. Net profit in FY21 stood at Rs 33,388 crore—an increase of 3% over the preceding year.
• Q4 Operating profit rose 4.92% to Rs 11,734 crore, against the Rs 11,777-crore forecast.
• Q4 Operating margin expanded to 26.8% from 26.6%. Analysts had pegged Ebitda margin at 27%.

Technology companies were among the worst hit after the Covid-19 pandemic stalled trade and forced employees to work from work, raising costs. The firms even lost billings as they generate most of their business overseas. The sector, however, rebounded in the second quarter of FY21, aided by large deal wins and client spending on cloud computing, artificial intelligence and internet of things as businesses moved online.

That helped TCS in the fourth quarter as the company reported deal wins worth $9.2 billion. Among others, TCS in January partnered Three UK to accelerate 5G network rollout. Over the next two months, it won real time payments contract from BankservAfrica, expanded tie with VodafoneZiggo to speed up its fixed fiber network rollout, and bagged a digital project from construction company Skanska.

TCS added 19,388 employees during the quarter and over 40,100 employees during the full year.

“Attrition in the last three months stood at 7.2%, mainly due to Covid-19 effect. Expect this to inch up with growth coming back to the industry,” Ramakrishnan V, the company's chief financial officer, said on a call with analysts.

Segment-Wise Performance

Revenue of TCS' key BFSI (banking financial services and insurance) segment grew 5.43% sequentially in the fourth quarter while that of its manufacturing segment rose 4.62%. Its retail and consumer business arm revenue increased 3.54% over the preceding quarter.

We're entering FY22 with significant visibility, said TCS' Chief Executive Officer Rajesh Gopinathan.

We have ended the year with the biggest order book of $9.2 billion, he said, adding order book for BFSI segment stood at $3.9 billion. The corresponding numbers for TCS' retail arm and its North America market were $1.4 billion and $4.2 billion, respectively.

The company has appointed Samir Seksaria as its chief financial officer, who will take charge from May 1. He succeeds the incumbent, Ramakrishnan V, who will retire on April 30.

Shares of TCS closed 2.3% lower before the results were announced, compared with a 3.5% drop in the benchmark Nifty 50.