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TCS Q3 results: Net profit rises 7% to Rs 8,701 crore; firm declares Rs 6/share dividend

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NEW DELHI: Tata Consultancy Services, India’s largest IT exporter in terms of revenues, on Friday said its profit rose 7.18 per cent YoY to Rs 8,701 crore in December quarter compared with Rs 8,118 crore in the corresponding quarter last year.

Analysts at an ET NOW poll had projected a profit figure at Rs 8,600 crore.

Revenue for the quarter rose 5.42 per cent YoY to Rs 42,015 crore compared with Rs 39,854 crore in the same quarter last year. The company said it was its strongest third quarter in nine years.

The company also announced a dividend at the rate of Rs 6 per share. Record date for the same is January 16.

In dollar terms, the revenue was up 5.1 per cent. On a constant currency basis, revenue rose 4.7 per cent, the IT major said in a BSE filing.

Operating margin for the quarter came in at 26.6 per cent compared with 25 per cent in the same quarter last year. Net margin stood at 20.7 per cent.

“Growing demand for core transformation services and strong revenue conversion from earlier deals have driven a powerful momentum that helped us overcome seasonal headwinds and post one of our best performances in a December quarter. We are entering the new year on an optimistic note, our market position stronger than ever before, and our confidence reinforced by the continued strength in our order book and deal pipeline,” said Rajesh Gopinathan, Chief Executive Officer and Managing Director, TCS.

TCS, as has been the case historically, did not offer any guidance. December usually is a seasonally weak quarter for IT firms due to furloughs and lower working days. However, the management of the company said TCS has had healthy deal closures and the growth has been broad based on a sequential basis.

All verticals showed good sequential growth, led by manufacturing (+7.1 per cent), BFSI (+2 per cent), life sciences and healthcare (+5.2 per cent), communications & media (+5.5 per cent) and retail and CPG (+3.1 per cent). On a YoY constant currency basis, life sciences and healthcare continued to grow in double digits at 18.2 per cent. BFSI (+2.4 per cent) and technology & services (+2.4 per cent) also moved into positive territory.

“Strong growth across all our verticals, and operational benefits from our SBWS model allowed us to post the highest operating margin in the last five years, even after rolling out a salary increase this quarter. We also had an all-time high cash conversion in Q3. This and our strong balance sheet position us very strongly to seize the opportunities that the current market offers, and more closely partner our customers in their growth and transformation journeys,” said V Ramakrishnan, Chief Financial Officer, TCS.

The company added 15,721 employees during the quarter. IT Services attrition rate dipped to a new all-time low, at 7.6% LTM (last twelve month), the company said.

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