Beating the industry estimates, India's largest software services exporter Tata Consultancy Services (TCS) has reported 18% year-on-year growth in revenue at ₹55,309 crore for the quarter ending September 30, 2022. The revenue in constant currency grew 15.4% growth on a year-on-year basis.
The IT bellwether's net profit crossed the ₹10,000 crore mark (₹10,431 crore), recording a growth of 8.4% on a year-on-year basis on strong growth across all its industry verticals, led by retail at 22.9% and CMI at 18.7%.
The TCS stock closed 1.84% up at ₹3,121.20 on the BSE today. The IT heavyweight outperformed the sector by 0.76% and went on to rise 2.12% at ₹3,129.9 during the intra-day trade. In contrast, the BSE benchmark Sensex closed 0.34% or 200.18 points down at 57,991.11 today.
The major markets for TCS – North America, the UK and Europe saw the business growing at 17.6%, 14.8% and 14.1%, respectively. Among emerging markets, India grew by over 16.7%, Latin America grew by over 19.0%, Middle East & Africa grew by over 8.2% and the Asia Pacific grew by over 7.0%.
TCS' operating margin for the July-September quarter stood at 24%; a contraction of 1.6% YoY, while the net margin was 18.9%. "Demand for our services continues to be very strong. We registered strong, profitable growth across all our industry verticals and in all our major markets. Our order book is holding up well, with a healthy mix of growth and transformation initiatives, cloud migration and outsourcing engagements," says Rajesh Gopinathan, chief executive and managing director, TCS.
He said as clients prepare for a more challenging environment ahead, technologies like a cloud that have been embraced now have to be fully leveraged to realise the promised value.
The TCS board during its meeting today also declared a second interim dividend of ₹8 per equity share of ₹1 each of the company. The second interim dividend shall be paid on November 7, 2022, to the equity shareholders.
Industry-wise, TCS' growth was led by retail and CPG (22.9%), communications & media (over 18.7%), and technology & services over 15.9%). Manufacturing as well as life sciences & healthcare verticals grew by over 14.5%, while BFSI grew by over 13.1%.
During Q2, TCS saw strong, broad-based growth for all services, led by cloud, enterprise application services, and cyber security. As on September 30, 2022, TCS’ workforce stood at 616,171, a net addition of 9,840 during the said quarter.
TCS' IT services attrition continues to be high – in line with industry trends – and stood at 21.5% on an annualised basis. But now with normalising wage expectations and talent supply catching up, it expects attrition to start to taper down in H2. "We believe our quarterly annualised attrition has peaked in Q2 and should see it taper down from this point, while compensation expectations of experienced professionals moderate,” says Milind Lakkad, chief HR officer, TCS.
The workforce comprised 157 nationalities and with women making up 35.7% of the base. TCS says it has been meeting the demand for services around new technologies by continually investing in organic talent development. As on September 30, 2022, the company had applied for 6,922 patents, including 170 applied during the quarter, and been granted 2,560 patents.