Tata Consultancy Services (TCS) on Wednesday reported a consolidated net profit of Rs 9,769 crore for the October-December quarter, up 1.5% sequentially, missing the Street’s expectations of Rs 9,988 crore. The company reported a margin contraction of 60 basis points at 25% against 25.60% in the preceding quarter, impacted by increased focus on hiring and retention of talent.
TCS announced share buyback at Rs 4,500 per share, a premium of 16.67% over the last traded price. TCS will buy back shares worth Rs 18,000 crore.
CEO and managing director Rajesh Gopinathan said the continued growth momentum was a validation of the collaborative, inside-out approach to customers’ business transformation needs. “While mapping out their innovation and growth journeys, we are also helping them execute new-age operating model transformations to support those journeys,” Gopinathan said.
The company reported a 4% sequential constant currency (CC) revenue growth, the strongest for a third quarter in the last five years. However, the attrition during the quarter surged 350 basis points to 15.3% quarter-on-quarter.
Consolidated revenues in Q3FY22 were in line with estimates and grew by 4.3% q-o-q to Rs 48,885 crore. Strong growth over the last four quarters helped TCS hit the $25-billion mark in revenues on a calendar year basis.
Samir Seksaria, CFO, TCS, said, “Our sustained investment in our talent has helped us power strong growth despite a challenging supply environment. We have exercised various operating levers in Q3 to mitigate the higher costs and manage our employee expense.”
TCS added 10 new clients in the $100-million-plus bracket, taking the total number to 58. There were 21 clients added in $50-million bracket, taking the total to 118 from 97, and 98 new clients added in $1-million-plus bracket. The TCV for the December ended quarter stood at $7.6 billion, an increase of 12% year-on-year. The year-to-date TCV came in at $23.3 billion.
TCS recorded net additions of 28,238 personnel in the third quarter, the highest ever added till date. While the attrition was up sharply by 350 basis points q-o-q at 15.3%, it is lower than industry standards. The management said that there are signs of attrition bottoming out in Q3FY22. The company handed out 1,10,000 promotions so far and additional 40,000 are planned in the March quarter. The quarter saw all industry verticals post a strong double-digit growth.