TCS Q4: Dividend, attrition, net profit, analysts view; here are key takeaways

While reporting its all-time high order book in the March quarter, Tata Consultancy Services (TCS) on Monday posted 7.35 per cent year-on-year (YoY) growth in consolidated net profit at Rs 9,926 crore. It had posted a profit of Rs 9,246 crore in the corresponding quarter last year. On the other hand, revenue from operations grew 16.57 per cent YoY to Rs 50,951 crore.

Bottom line and the top line of the IT major advanced 1.60 per cent and 4.22 per cent on a quarter-on-quarter basis. Earlier in the day, shares of the company settled 0.26 per cent higher at Rs 3,696.40. The benchmark BSE Sensex closed 0.81 per cent up at 58,964.57.

Commenting on the financial results, Rajesh Gopinathan, chief executive officer and managing director, TCS said, "We are closing FY22 on a strong note, with mid-teen growth and adding the maximum incremental revenue ever. Increasing participation in our customers' growth and transformation journeys, and an all-time high order book provide a strong and sustainable foundation for continued growth ahead."

Here are other key takeaways from earnings:

Market wise growth: Growth among markets was led by North America which grew over 18.7 per cent in Q4FY22. It was followed by the UK (up over 13 per cent) and Continental Europe grew (over 10.1 per cent). Among emerging markets, Latin America, the Middle East & Africa and India grew over 20.6 per cent, 7.3 per cent and 7 per cent, respectively. The Asia Pacific also witnessed a growth of over 5.5 per cent.

On a full-year basis, among major markets, North America grew (over 17.5 per cent), Continental Europe (15.1 per cent) and the UK (14.3 per cent). In emerging markets, Latin America (18.2 per cent), India (16 per cent), Middle East and Africa (12.9 per cent) while Asia Pacific (6.7 per cent).

Research and innovation: As of March 31, the company has applied for 6,583 patents, including 187 applied during the quarter, and has been granted 2,287 patents. For the full year, TCS filed for 704 patents and was granted 437.

Also Read: TCS Q4 results: Net profit rises 7% to Rs 9,926 cr, revenue up 16%, dividend declared

What's in it for employees: In Q4, TCS added 35,209 employees on a net basis, the highest ever net addition in a quarter. Employee headcount stood at 592,195, a net addition of 1,03,546 during the year, another all-time high. The workforce continues to be very diverse, comprising 153 nationalities and with women making up 35.6 per cent of the workforce. IT Services attrition (LTM) stood at 17.4 per cent in Q4FY22 against 15.30 per cent in the previous quarter ended December 31.

What's in it for shareholders: The company recommended a final dividend of Rs 22 per equity share. The same will be paid on the fourth day from the conclusion of the 27th annual general meeting.

Order book: The company achieved the highest ever order book with a total contract value of $11.3 billion in Q4FY22 and $34.60 billion in FY22.

N Ganapathy Subramaniam, chief operating officer and executive director, TCS said: "It is immensely satisfying to close the year with robust, broad-based growth, industry-leading margins and the highest ever order book. During the year, we took on technologically challenging, industry-first transformational programs and brought to bear the full power of TCS' capabilities and that of our partner ecosystem, to successfully deliver market-changing outcomes."

Report card for FY22: For the financial year ended March 31, the company posted 16.80 per cent YoY growth in revenue from operations at Rs 1,91,754 crore. Profit attributable to shareholders increased 18.10 per cent YoY to Rs 38,327 crore.

Analyst view: Abhay Agarwal, founder, and fund manager, Piper Serica, a SEBI registered PMS provider said, "TCS results are largely in line with our expectations. The company continues to build on strong momentum and is using its large size to win mega deals of more than $1 billion. We are confident that it will continue to drive growth by focusing on these mega deals."

"The margins are slightly below expectations and a key reason could be a high attrition rate of 17.4 per cent. We expect the attrition rate to stay elevated over the next year as the demand for software engineers is very robust. Overall, it is comforting to see that the global demand environment remains robust and TCS is continuing to deliver on its growth targets. The top-of-the-pyramid in the global IT services industry has now got well defined and TCS is a well-established part of it," Agarwal said.

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