TCS posts strong Q4 results helped by $9.2-bn order book; revenue rises 4%

India's top technology services firm Tata Consultancy Services on Monday reported 6.26 per cent sequential growth in net profit at Rs 9,246 crore in its fourth quarter results, for the quarter ended March 31, 2021, helped by record bookings. 

Revenue rose 4 per cent sequentially to Rs 43,705 crore. 

Operating margin in Q4FY21 came in at 26.8 per cent, compared to 26.6 per cent in the previous quarter, an improvement of 20 basis points.

The order book in the fourth quarter was $9.2 billion, the highest ever total contract value in a quarter.

“Our investments over the last decade in building newer capabilities, and in research and innovation, position us well for the multi-year technology services opportunity ahead. While we continue to dominate in our traditional areas of strength, we are making good progress in gaining share in the growth and transformation opportunity. Our focus going into FY 22 will be to engage with clients in their growth agenda, propelled by innovation and leverage of collective knowledge," said Rajesh Gopinathan, Chief Executive Officer and Managing Director.

Attrition was 7.2 per cent during the quarter. TCS added 19,388 employees during the quarter, the highest ever in a quarter, the company said. The total employee headcount was 488,649. 

“With the second wave of the pandemic upon us, our top priority is once again to secure the health and personal wellbeing of our workforce across the world. We are looking at ways to expedite vaccinations for eligible TCSers wherever local regulations allow it, and in the meantime, urge everyone to stay safe, step out only if necessary, wear masks and practice physical distancing,” said Milind Lakkad, Chief HR Officer at TCS in a statement.

The company also announced a final dividend of Rs 15 per equity share of Re 1 face value, which will be paid or dispatched on the fourth day from the conclusion of the Annual General Meeting, subject to approval of the shareholders.

Analysts said they expect India’s biggest software services players to post their strongest performance in the past few quarters, or even years, in the fourth quarter of FY21. 

With improvement in banking, financial services, and insurance or BFSI, as well as retail, manufacturing, and health care, analysts pegged sequential revenue growth in Q4 at 2-5 per cent, with many upbeat that year-on-year (YoY) growth will be in double digits.  

Last month, IT consulting firm Accenture raised its full-year revenue forecast to between 6.5 per cent and 8.5 per cent in local currency, up from the 4 per cent-6 per cent it had forecast earlier. It reported an 8 per cent increase in second quarter revenue (in dollar terms), helped by record bookings of $16 billion.

Analysts have also said growth for the fourth quarter of FY21 will be driven by acceleration in digital technologies, improved demand in the aftermath of Covid, ramp-up in deal wins, and migration to cloud.