Tata Consultancy Services (TCS) on October 8 reported a consolidated net profit of Rs 9,624 crore for the quarter ended September 2021 (Q2FY22), registering a 14.1 percent year-on-year (YoY) growth, driven by broad-based demand and resilient margins.
The profit was also driven by other income that increased 21.6 percent YoY (up 54.1 percent QoQ).
The profit growth on a YoY basis was after the adjustment for provision for legal claim reported by the company in September 2020 quarter. The reported profit growth was 28.7 percent YoY.
Its consolidated revenue during the July-September period stood at Rs 46,867 crore, up 16.8 percent over a year-ago quarter, with double-digit growth across business verticals, led by ramp-up in order books, recovery in India business and increase in digital spending by corporates.
The revenue growth in constant currency came in at 15.5 percent YoY.
Here are the highlights from TCS’ Q1 FY22 earnings call as compiled by Narnolia Financial Advisors:
The 2QFY22 was a strong quarter with all the industry verticals growing at mid-teens or more driven by increase outsourcing, investment in building digital core, and growth and transformation.
The company’s revenue grew by 4% QoQ and 15.5% YoY in CC terms, 3.2% QoQ and 16.8% YoY in Rupee term to Rs 46867 crore and 2.9% QoQ and 16.8% YoY in dollar terms to USD 6.333 billion.
The BFSI segment grew by 17% YoY in CC terms and crossed USD 2 billion quarterly revenue run rate.
Good acceleration was visible in communication and media which grew by 15.6% YoY and Technology and Services grew 14.8% YoY in CC terms.
Supply-side shortage and increase in employee churn had led to higher back filing expense and greater use of subcontractors across the industry.
Currency was not favorable in the quarter as the US dollar appreciated and all other currencies depreciated against rupee creating margin a headwind.
EBIT Margin expanded by 10 bps QoQ to 25.6% despite the headwinds due to disciplined aggregation.
The order book for the quarter was healthy with a TCV of USD 7.6 billion distributed across verticals and geographies.
BFSI segment deal wins stood at TCV of USD 2.1 billion, the retail segment with USD 1.2 billion and North America with USD 3.9 billion TCV.
During the quarter there was robust client addition in every revenue bucket.
Management guided that the demand environment is strong and is sustainable over the medium term.
Management guided that margins were maintained in the quarter despite the supply-side issue but not certain for coming quarters.