on BSE, TCS shares closed less than 3,264.85 22.10 or 0.67%.
“Missing on both revenue and margins,” said Aditi Patil, research associate at Prabhudas Lilladher at TCS. According to Patil, the company’s revenue grew by 1.3% QoQ (PLe: 2%, Cons: 1.5%) in dollar terms and 3.5% QoQ (Ple: 4%, Cons: 3.6%) in CC terms. In dollar terms, growth was led by Retail & CPG (+4.5% QoQ), Communications & Media (+2.9% QoQ), Tech Services (+2.4% QoQ), Lifesciences and Healthcare (+2.3% QoQ). BFSI rose 1.9% QoQ. Growth in manufacturing (0.2% QoQ) remained muted. Further, EBIT margin came in at 23.1%, a decline of 190bps QoQ (Ple: 24%, Cons: 23.5%).
Mitul Shah, Head of Research Associate at Reliance Securities said, “TCS reported a weak performance in 1QFY23, with EBIT margin coming in at 23.1%, which is 60bps lower than our estimate of 23.7%”, adding, “EBIT has increased by 4% QoQ (up 5% YoY) to Rs 121.8bn while EBIT margin was 23.1% (down 186bps QoQ / down 242bps YoY), 60bps below our estimate of 23.7% (consensus 23.5%) “
Here are 10 key pieces of earnings.
1. Consolidated revenue,
Consolidated revenue from operations stood at 52,758 crore in Q1FY23 as compared to 45,411 crore in Q1FY22 and 50,591 crore in Q4FY22. Consistent currency revenue growth is 15% annually. profit after tax (PAT) was 9,478 crore up from 9,008 crore in Q1FY22. PAT declines as compared to March 2022 quarter 9,959 crores.
earnings per share is compared to 25.90 24.35 per share in Q1FY22.
2. Margin:
In Q1FY23, the company’s net margin stood at 18%. While its operating margin declined 2.4% year-on-year to 23.1% in the quarter.
Sameer Seksaria, Chief Financial Officer, TCS said, “This quarter has been challenging from a cost management perspective. Our Q1 operating margin of 23.1% reflects the impact of our annual salary increase, higher cost of management of talent churn and gradually normalizing travel expenses. However, our long-term cost structure and relative competitiveness remain unchanged, and position us well to continue on our profitable growth trajectory.”
3. Strong Order Book:
TCS’ order book remained strong during the quarter under review. The company posted an order book of $8.2 billion. It had stellar customer metrics. In Q1FY23, TCS added 9 new customers in the over $100 million band annually, while 19 customers added in the over $50 million band.
4. Standalone Earnings:
The company’s revenue came from operations 44,480 cr in Q1FY23 37,722 crore in Q1FY22 and 42,459 crore in Q4FY22. pat jumped 8,588 crore from 8,281 crore in Q1FY22, however, declined from 9,795 crore in the previous quarter.
5. Double Digit Growth in Industries:
Retail & CPG (25.1%), Communications & Media (+19.6%), Manufacturing vertical (+16.4%) and Technology & Services (+16.4%) led the growth. BFSI grew by +13.9% while Life Sciences & Healthcare grew by +11.9%.
6. Geographical Display:
TCS said North America led the major markets, with growth of more than 19.1%; Continental Europe increased by over 12.1% and the UK by over 12.6%. Among emerging markets, India grew over 20.8%, Asia Pacific grew over 6.2%, Latin America grew over 21.6%, and the Middle East and Africa grew by 3.2%.
7. Services:
TCS said there was strong, broad-based demand across a variety of services, led by cloud, consulting and service integration, cognitive business operations and enterprise application services. The key themes driving G&T demand in Q1 were customer experience, cloud transformation and sustainability.
8. Employee Base:
In the quarter, TCS touched a milestone with its workforce. In the quarter, TCS touched a milestone with the workforce crossing the 6 lakh mark. As on June 30, 2022, the company’s headcount stood at 606,331 with a net increase of 14,136 during the quarter. With 153 nationalities and women making up 35.5% of the base, the workforce remains very diverse.
TCS gradually accelerated its return to the office in Q1, with about 20% of its workforce now working from the office. The attrition for IT services was 19.7% on a last twelve month basis.
9. Research and Innovation:
As of June 30, 2022, the company has applied for 6,752 patents, of which 169 have been applied for during the quarter, and 2,400 patents have been granted.
10. Dividend:
TCS declared interim dividend of 8 per equity share which has a face value of Re 1 for each shareholder. TCS announced July 16 as the record date for identifying shareholders eligible for dividend payment. Thereafter, TCS has fixed August 3 as the date for payment of dividend to these shareholders.