TCS Q1FY23 Results: Consolidated profit decline 4.5% to Rs 9,478 crore, declares interim dividend of Rs 8/share

Tata Consultancy Services (TCS) on Friday reported a 4.51% QoQ decline in the consolidated profit at Rs 9,478 crore for the first quarter ended June 30, 2022 (Q1FY23). It had posted a profit of Rs 9,926 crore in the previous quarter ended March 31, 2022 (Q4FY22).

The company's revenue from operations grew 4.3% to Rs 52,758 crore in the reported quarter against Rs 50,591 crore posted in the previous quarter. EBIT of the information technology company dropped by 3.5% to Rs 12,186 crore against Rs 12,628 crore while its margin contracted to 23.1% in Q1FY23 against 24.96% posted in Q4FY21.

The Board of Directors at its meeting held on July 8, 2022, has declared an interim dividend of t8.00 per equity share.

Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: "We are starting the new fiscal year on a strong note, with all-round growth and strong deal wins across all our segments. Pipeline velocity and deal closures continue to be strong, but we remain vigilant given the macro-level uncertainties. Our new organization structure has settled in nicely, getting us closer to our clients and making us nimbler in a dynamic environment. Looking ahead, we remain confident in the resilience of technology spending and the secular tailwinds driving our growth."

N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, said: "We are pleased with our execution during the quarter wherein we successfully delivered several transformation programs. The investments we made on people, upskilling efforts and select lateral hiring et al helped manage the talent turnover with minimum impact on our operations. During the quarter, we resumed in-person meetings, and hosted several clients at our facilities. We are bringing in more of our associates back to our development centres, and it is steadily increasing at all levels. On the sustainability front, we have signed our commitment to SBTi version 5 standards during the quarter and are making steady progress towards our net zero journey with tremendous alignment to this initiative across our associates."

Samir Seksaria, Chief Financial Officer, said: "It has been a challenging quarter from a cost management perspective. Our Q1 operating margin of 23.1% reflects the impact of our annual salary increase, the elevated cost of managing the talent churn and gradually normalizing travel expenses. However, our longer-term cost structures and relative competitiveness remain unchanged, and position us well to continue on our profitable growth trajectory."

Q1 Industrial Segment Highlights

• Retail and CPG growth stood at 25.1%.
• Communications & Media growth stood at 19.6%.
• Manufacturing vertical growth stood at 16.4%.
• Technology & Services growth stood at 16.4%.
• BFSI grew 13.9%.
• Life Sciences and Healthcare grew 11.9%

Q1 Market-wise Highlight

Among Major Markets

• North America grew 19.1%.
• Continental Europe grew 12.1%.
• The UK grew 12.6%.

In Emerging Markets

• India grew 20.8%.
• Asia Pacific grew 6.2%.
• Latin America grew 21.6%.
• Middle East & Africa grew 3.2%.

TCS in a statement said, "There was strong, broad-based demand across the different services, led by Cloud, Consulting & Service Integration, Cognitive Business Operations and Enterprise Application Services. Key themes driving G&T demand in Q1 were customer experience, cloud transformation and sustainability."

Human Resources

TCS' workforce stood at 606,331 as on June 30th, a net addition of 14,136 during the quarter. The workforce continues to be very diverse, comprising 153 nationalities and with women making up 35.5% of the base.

TCS continues to invest in organic talent development as part of its expansion into the growth and transformation opportunity. In Q1, TCSers clocked 12 million learning hours, resulting in the acquisition of 1.7 million competencies.

The company gradually accelerated its return to office program in Q1, with about 20% of the workforce now working from office. IT services attrition was 19.7% on the last twelve months' basis.