TCS Q1 PAT slips 2.5% QoQ to Rs 9,008 cr

On a consolidated basis, TCS' net profit fell 2.57% to Rs 9,008 crore on 3.90% increase in net sales to Rs 45,411 crore in Q1 June 2021 over Q4 March 2021.

On a year-on-year (YoY) basis, the IT major's net profit rose 28.54% and net sales rose 18.50% in Q1 June 2021 over Q1 June 2020.

Constant currency revenue grew 16.4% YoY. Operating margin expanded 1.9% YoY to 25.5% in Q1 June 2021.

Profit before tax slipped 2.90% to Rs 12,163 crore in Q1 FY22 as against Rs 12,527 crore in Q4 FY21. Net cash from operations was at Rs 10,296 crore i.e. 114.3% of net income during the quarter.

The company's order book grew 17.3% to $8.1 billion in Q1 June 2021 over Q1 June 2020.

The board has declared an interim dividend of Rs 7 per equity share. Record date is set at 16 July 2021.

The company said all its business verticals showed good sequential as well as YoY growth. Growth during the quarter was led by cloud strategy andtransformation, next-generation enterprise transformation and supply chain services, with demand led by manufacturing & utilities and life sciences among the industry verticals.

Growth continued to be led by life sciences and healthcare (+7.3% QoQ, +25.4% YoY). Retail and consumer packaged goods (CPG) also bounced back to double digit growth, growing 4.4% QoQ and 21.7% YoY. BFSI (+3.1% QoQ, +19.3% YoY), manufacturing (+4.8% QoQ, +18.3% YoY), technology & services (+5% QoQ, +12.3% YoY) and communications & media (+1.7% QoQ, +6.9% YoY) also saw significantly improved performance.

Growth was led by North America (+4.1% QoQ, +15.8% YoY), UK (+3.6% QoQ, +16.3% YoY), Continental Europe (+1.5% QoQ, +19.7% YoY), Latin America (+4% QoQ, +16.1% YoY) and Middle East & Africa (+4.2% QoQ, +25.3% YoY). The pandemic's second wave impacted sequential growth in India (-14.1% QoQ, +25.3% YoY) and Asia Pacific (+2.4%QoQ, +9.3% YoY).

TCS' employee headcount crossed the 500,000 mark in Q1, with 509,058 employees as of 30 June 2021, a net addition of 20,409 its highest quarterly net addition ever. Last twelve months IT services attrition rate stood at 8.6%, which is lowest in the industry.

Rajesh Gopinathan, chief executive officer and managing director, said: "I am humbled that in a personally challenging quarter to many, TCSers demonstrated phenomenal character in helping each other, be meaningful to the communities and delivered on our commitments to clients. On that backdrop, our business in North America, BFSI and Retail all showed an appreciable growth which underlines the resilience of our operating model, relevance of our offerings and above all,thepassion and dedication of our associates. Given the variants of the virus and fearsof a potential third wave, we are watchful of the emerging situation and remain optimistic of the opportunities in our core markets and verticals. We are well positioned and operating diligently to participate in them aggressively."

N Ganapathy Subramaniam, chief operating officer & executive director, said: "We overcame the challenges posed by the second wave of Covid-19 in India taking some practical approaches and am satisfied that the delivery of all our client engagements was kept on track. We once again had a superior quarter with a TCV of $8.1 billion which is broad based across markets and verticals. Our G+T themes are seeing traction in the market place and we are delighted to sign our largest SaaS deal ever for the TCS BaNCS Global Banking Platform on the cloud during the quarter."

Samir Seksaria, chief financial officer, said: "We crossed the $6 billion milestone in quarterly revenue this quarter. In addition to our annual salary increase and promotions, we undertookone of the largest vaccination drives in the private sector. Despitethis and headwinds in regional markets, we expanded our Q1 operating margin year on year, reflecting the inherent resilience of our business model. Looking ahead, we stay focused on making the right investments to power our expansion in the growth and transformation opportunity, while sustaining our industry-leading profitability."

TCS is an IT services, consulting and business solutions organization. It offers a consulting-led, cognitive powered, integrated portfolio of business, technology and engineering services and solutions.

Shares of TCS were down 0.85% at Rs 3229.40. The stock hit a high of Rs 3274.20 and a low of Rs 3211.85 in initial trade.

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