Tata Consultancy Services (TCS) declared an interim dividend of Rs 8 per share of Re 1 each on Friday, while reporting reported a 5% increase in its net profit at Rs 9,478 crore for the first quarter of the current fiscal as compared to Rs 9,008 crore from the same quarter a year ago. The interim dividend will be paid to the equity shareholders whose names appear on the register of members of the company or in the records of the depositories as beneficial owners of the shares as on 16 July 2022 which is the record date fixed for the purpose. While the PAT increased on-year, it was down 4.5% sequentially from Rs 9,926 crore recorded in the previous quarter ending March 2022.

Consolidated revenue jumps 16.2% YoY to Rs 52,758 crore

Consolidated EBIDTA for the quarter under review came in at Rs 12,186 crore. EBIDTA margin stood at 23.1% in the June quarter compared with 25% in the March quarter and 25.5% in the June quarter last year. Company’s revenue during the April-June quarter of this fiscal came in at Rs 52,758 crore, growth of 16.2% on-year compared with Rs 45,411 crore in the year-ago quarter. Its Constant Currency (cc) revenue growth was up 15.5% on-year and net margin during the quarter came at 18%. Net cash from operations was at Rs 10,810 crore, 114.1% of the net income. TCS stock closed at Rs 3,266, down 0.66% on NSE ahead of the result.

Growth led by Retail & CPG, Communication & media verticals

The company’s order book stood at $8.2 billion. “Pipeline velocity, deal closures continue to remain strong,” said CEO Rajesh Gopinathan. It added nine new clients to the 100 million-plus band on-year while 19 clients were added to the $50 million-plus band. Among verticals, growth was led by retail and CPG (25.1%), communications & media (up 19.6%), manufacturing vertical (up 16.4%) and technology & services (up 16.4%). According to the regulatory filing, company’s BFSI vertical grew 13.9%, while Life Sciences and Healthcare vertical saw growth of 11.9%. In terms of geographies, North America led the growth at 19.1%; continental Europe grew 12.1%, and the UK saw a growth of 12.6%. In emerging markets, India grew 20.8%, Asia Pacific, 6.2%, Latin America grew 21.6%, and the Middle East & Africa grew 3.2%.

TCS hires 14,136 employees in Q1; Attrition inches up to 19.7%

The company added 14,136 employees for the first quarter of the current financial year, but its attrition continued to inch up to 19.7%. TCS’ workforce stood at 606,331 as on 30 June, 2022. Research and brokerage firms expected revenues growth at 3.6-4% sequentially CC in 1QFY23, driven by continued demand momentum, strong order book win in the earlier quarter but impacted by a 200bps cross-currency hit. EBIT margins were expected to contract sequentially due to wage hikes, visa costs and supply side pressures, partially offset by Rupee depreciation.

Q1 Results miss street expectations, TCS shares may slide towards 3,000 if 3,200 support breached

“TCS missed street expectations in Q1 earnings as margins are under pressure and the attrition rate is still high. However, the counter headed in its Q1 earnings with tepid expectations therefore there is no knee jerk reaction expected while buying can be seen at lower levels.” said Santosh Meena, Head of Research, Swastika Investmart Ltd said. “Technically, The counter is still making lower highs and lower lows formation where a 50-DMA of 3333 is an immediate hurdle; above this, we can expect a short-covering rally towards the 3470-3500 zone. It has to sustain above the 3500 mark for any major buying interest. On the downside, 3200 is an immediate support level; below this, it is vulnerable to a fall towards the 3000 mark however 3000 is a good level for fresh entry,” Meena added.