Tata Consultancy Services on Thursday announced a 28.5 per cent increase in net profit to ₹9,008 crore during the first quarter of this fiscal compared to ₹7,008 crore in the same period last year. But, on a sequential basis, the profit fell by 2.5 per cent compared to ₹9,246 crore in Q4 of FY21.

The company’s consolidated revenue from operations jumped to ₹46,132 crore in the first quarter from ₹38,920 crore in the same period last year.

Interim dividend

Rajesh Gopinathan, Chief Executive Officer and Managing Director, said the company has seen strong growth in its core markets and verticals, but there were challenges in emerging markets led by India. “We did not anticipate the viciousness of the second wave, especially in markets like India. But June has seen some stabilisation, so we will be bouncing back in the second quarter.” The company declared an interim dividend of ₹7 per equity share.

The company’s operating margin was down to 25.5 per cent in the Q1 of FY22 compared to 26.8 per cent in Q4 of FY21.

Samir Seksaria, Chief Financial Officer, explained that the dip in margin was due to salary increase but some of it was offset by currency gains. “Overall, we should be able to sustain our margin in line with our aspirational band (26-28 per cent ),” Seksaria added.

The company continued to hire and has now crossed the 5-lakh headcount milestone in the first quarter with total headcount at 509,058. It achieved an all-time high quarterly net addition of employees in Q1 at 20,409. But the attrition was at a high of 8 per cent. “Attrition is artificial due to the pandemic. But it is part of the operating model. I don't see it impacting us in a significant way,” said Milind Lakkad, Chief Human Resource Officer, TCS.

All verticals showed good sequential as well as YoY growth. Growth continued to be led by Life Sciences and Healthcare. Retail and Consumer Packaged Goods also bounced back to double-digit growth. Growth was led by North America as usual. The second Covid wave hit sequential growth in India by 14.1 per cent q-o-q.

“We crossed the $6-billion milestone in revenue this quarter. In addition to annual salary increase and promotions, we undertook one of the largest vaccination drives in the private sector. Despite this and headwinds in regional markets, Q1 operating margin was expanded yoy, reflecting the inherent resilience of our business model,” Seksaria said.

Jyoti Roy, DVP, Equity Strategist, Angel Broking told BusinessLine , “India business getting impacted was a key factor that dragged down the growth of the company. The overall dollar revenue growth was below Street estimates. Overall the markets are going to be bit disappointed with the numbers tomorrow but it’s not a major worry. In a nutshell, it’s a mix set of numbers.”

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