TCS Q4 net profit jumps 15% to Rs 9,246 crore; revenue at Rs 43,705 crore

Tata Consultancy Services (TCS), India’s largest IT services player, reported a strong set of numbers for its fourth quarter of FY21, as clients continued to spend on digital services and focused on reimagining their business operations.

The biggest takeaway from the Q4 numbers was the order book at $9.2 billion, the highest ever reported by TCS in a quarter since the company started reporting this metric.

TCS’ net profit for the quarter was up 14.9 per cent at Rs 9,246 crore year-on-year, and 6.2 per cent quarter-on-quarter (QoQ).

Revenue at Rs 43,705 crore grew 5.9 per cent YoY and 4.2 per cent QoQ.

For the full year, the company reported revenue of about Rs 1.65 trillion, up 4.6 per cent but on a constant currency basis revenue was down 0.8 per cent.

Rajesh Gopinathan, chief executive officer and managing director, TCS, said the company entered FY22 more confidently and with better visibility. “As I have stated in the past, growth is being led by core transformation opportunities such as cloud migration, application transformation, and digital services. Our focus going into FY 22 will be to engage with clients in their growth agenda, propelled by innovation and leverage of collective knowledge.”

Growth for the quarter was led by large geographies and sectors. BFSI (banking, financial services, and insurance) grew 7 per cent on QoQ on a constant currency basis, led by large transformational deals, and core transformation. Retail and CPG (consumer packaged goods) grew 4 per cent sequentially and manufacturing was up 3.9 per cent. In terms of geography, North America grew 3.9 per cent QoQ, continental Europe 8.5 per cent, and the UK grew 3.4 per cent sequentially.

Other markets also grew well with West Asia and Africa showing 4.2 percent sequential growth, India 2.8 per cent, Latin America 2.5 per cent, and the Asia Pacific 1 per cent. The company delivered margin improvement as it continued to focus on operational efficiencies and sign large transformational deals. The margins for the quarter were 26.8 per cent, the highest since September 2015.

V Ramakrishnan, chief financial officer, said: “This caps three quarters of consistently robust performance in a pandemic year, and gives us a strong exit from FY 21. Our Q4 margins are a validation of our strong belief that it is possible to win mega-deals, post industry-leading growth, continue to invest in our people and in newer capabilities, and still deliver industry-leading profitability.”

Revenue in dollar terms grew by 5 per cent sequentially to $5,989 million in the quarter ended March 2021, and 10 per cent on a YoY basis. Technology companies were among the worst hit after the pandemic stalled trade and forced employees to work from work, raising costs. The firms even lost billings as they generate most of their business overseas. The sector rebounded in the second quarter, aided by large deal wins and client spending on cloud computing, AI, and the internet of things as businesses moved online.

TCS had one of its highest net additions this quarter at 19,388 and the company also saw one of its lowest attrition rate at 7.2 per cent.

It has recommended a final dividend of Rs 15 per equity share.