TCS Q3 results: Profit jumps 11% YoY to Rs 10,846 crore; Rs 75 dividend declared

Tata Consultancy Services (TCS), India's largest IT exporter, on Monday reported a 11 per cent year-on-year (YoY) rise in profit at Rs 10,846 crore for the December quarter compared with Rs 9,769 crore in the corresponding quarter last year. 

Revenues for the quarter jumped 19.10 per cent YoY to Rs 58,229 crore from Rs 48,885 crore in the same quarter last year. On constant currency terms, revenues were up 13.5 per cent YoY.  

Operating margin for the quarter stood at 24.5 per cent, down 0.5 per cent YoY.

The company board declared a third interim dividend of Rs 8 and a special dividend of Rs 67 per equity share.

Order wins

Order book for the quarter stood at $7.8 billion, the major said, adding that book-to-bill was at 1.1 times.

TCS said its net cash from operations came in at Rs 11,154 crore ie 102.8 per cent of net income. 

Net headcount declined 2,197 while the total workforce strength stood at 6,13,974, TCS said. 

In the last twelve months, IT Services attrition rate stood at 21.3 per cent.

How verticals & geographies performed

Chief Executive Officer and Managing Director Rajesh Gopinathan of TCS, said: "We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and UK. The sustained strength of demand for our services is a validation of the value we provide to our clients in helping them differentiate themselves, while enhancing their competitiveness. Looking ahead, and beyond current uncertainties, our longer-term growth outlook remains robust."

Among verticals, growth was led by Retail and CPG (18.7 per cent) and Life Sciences & Healthcare (up 14.4 per cent), Communications & Media (up 13.5 per cent) and Technology & Services (up 13.6 per cent).

Manufacturing grew 12.5 per cent while BFSI grew 11.1 per cent, TCS said. 

Among major geographies, North America and UK led the growth at 15.4 per cent each, Continental Europe grew at 9.7 per cent. In emerging markets, Latin America grew at 14.6 per cent, India at 9.1 per cent, Asia Pacific grew at 9.5 per cent and Middle East & Africa at 8.6 per cent.

What the management says

Chief Financial Officer Samir Seksaria said: “Improved productivity, currency support and abating supply-side challenges helped expand our operating margin in Q3. This gives us greater confidence in our ability to steer our profitability towards our preferred range, while continuing to invest in building newer capabilities to support our growth and market share gains.”

N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, said: “As I look back at 2022,
it’s gratifying to see the privileged partnership that we continue to enjoy with our clients globally. In a hybrid working model we delivered many complex transformation programs tailored to the specific needs of our clients’ ecosystem with speed and agility. It’s also refreshing to see our delivery centers and PacePort labs busy with our consultants and client executives jointly reimagining solutions to deliver the future, now." 

Subramaniam said the year also saw his company embracing data, AI and ML holistically to disrupt itself and drive competitive advantage to clients’ businesses. 

"All this augur well for our future as we step into 2023,” he said.

TCS said its cloud units continued to see very strong growth led by services for cloud migration and modernisation, hybrid cloud adoption, managed services and governance.

In the case of digital transformation services, "growth in Q3 was led by offerings around Salesforce, SAP, and niche SaaS platform services in the areas of human capital management, supply chain & CRM, managed security services and enterprise vulnerability management."

TCS said there was increased SaaS adoption to improve the experience across sales & service channels, improve employee engagement, and derive better business insights. TCS’ services leveraging TCS Crystallus™ are delivering business value through industry innovations across the enterprise. 

"On the cybersecurity front, clients engaged TCS to uplift and automate the invested ‘defense in depth’ security architecture and processes while ensuring agility in tackling adverse events through threat surface management and automation," TCS said.