India's largest software exporter Tata Consultancy Services (TCS) reported a strong set of numbers in a seasonally weak quarter for the industry. TCS posted a dollar revenue growth of 5.1 per cent sequentially and 2.1 per cent year-on-year (YoY) in the third quarter of FY21. The YoY growth in the constant currency terms, which was in the negative territory over the past two quarters, also recovered standing at 0.4 per cent in the third quarter of FY21.
The company's operating margin expanded by 40 basis points standing at 26.6 per cent, compared to 26.2 per cent in the previous quarter.
Rajesh Gopinathan, CEO and MD, TCS, pointed out that the company has grown with higher profitability in a quarter where it had also rolled out increments. The cash conversion also stood at an all-time high at 137.4 per cent with cash from operations coming at $1.62 billion.
"The highlight of the quarter has been a broad-based growth across the segments and from customer acquisition and deal flow," said Gopinathan. On a YoY basis banking and financial services, technology services verticals turned positive in constant currency growth at 2.4 per cent each, while life sciences further grew by 100 bps, at 18.2 per cent in the quarter.
"With the performance of this quarter on constant currency revenue terms growth, we have achieved the year-on-year parity that we spoke of and we have done that in Q3 on target," added Gopinathan.
While at the beginning of the financial year, the company had indicated the impact of COVID on revenues would be comparable to the global financial crisis, in FY10 when TCS was a $6.34 billion company, it had clocked an annual growth of 5.38 per cent.
Sharing his optimism for the calendar year 2021 as well as FY22, Gopinathan said, "We are now confident about the year ahead, we are very confident we should be able to get back to our aspirational double-digit growth."
The company announced an interim dividend of Rs 6 per share for which the record date is 16 January and the payment date is 3 February.