Income Rises For Third Straight Quarter, Margin Improves


The turnover of Tata Consultancy Services Ltd. grew for the third quarter in a row as customers continued to spend on digital services amid the pandemic and contract wins. This helped maintain the double digit revenue guidance for the fiscal year through March 2022.

Revenue of India’s largest exporter of software services rose 4% to 43,705 billion rupees in the past quarter compared to the previous quarter. This is comparable to the consensus estimate of Rs 43,551 for analysts captured by Bloomberg.

  • Revenue in US dollars increased 5% sequentially to $ 5,989 million.
  • Sales in fiscal year 21 increased by 4.6% compared to the previous year.

Further highlights (compared to the previous quarter):

  • Net income rose 6.26% to Rs 9,246 billion, compared to the estimate of Rs 9,276 billion. The final result for Fiscal Year 21 was Rs 33,388 billion – an increase of 3% over the previous year.
  • Operating profit rose 4.92% to Rs 11,734 billion from a forecast of Rs 11,777 billion.
  • The operating margin rose from 26.6% to 26.8%. Analysts had set the Ebitda margin at 27%.

Tech companies were among the hardest hit after the Covid-19 pandemic stalled trade and forced employees to work off work, adding to costs. The companies have even lost bills as they generate most of their business overseas. However, the sector rebounded in the second quarter of Fiscal 21, helped by big gains and customer spending on cloud computing, artificial intelligence, and the Internet of Things as companies went online.

That helped TCS in the fourth quarter when the company reported $ 9.2 billion in deal profits. Among other, TCS in January partnered with Three UK to accelerate the rollout of the 5G network. Over the next two months, the company received a real-time payment contract from BankservAfrica, expanded its collaboration with VodafoneZiggo to accelerate the adoption of the fixed line, and hired construction company Skanska to carry out a digital project.

TCS employed 19,388 people in the quarter and over 40,100 in the year as a whole.

“The abrasion in the last three months was 7.2%, mainly due to the Covid-19 effect. Expect this to increase as the industry grows, ”said Ramakrishnan V, the company’s chief financial officer, speaking to analysts.

Revenue in TCS ‘major BFSI (banking financial services and insurance) segment increased 5.43% sequentially in the fourth quarter, while manufacturing increased 4.62%. Sales in the retail and consumer goods businesses increased 3.54% from the previous quarter.

We are entering fiscal 22 with significant visibility, said Rajesh Gopinathan, Chief Executive Officer of TCS.

We ended the year with the largest backlog of $ 9.2 billion. The backlog for the BFSI segment was $ 3.9 billion. The corresponding figures for TCS’s retail arm and the North American market were $ 1.4 billion and $ 4.2 billion, respectively.

The company has named Samir Seksaria as Chief Financial Officer, who will take over from May 1st. He succeeds incumbent Ramakrishnan V, who will retire on April 30th.

TCS shares closed 2.3% ahead of the results announcement, compared to a 3.5% decline in the Nifty 50 benchmark.