Result Analysis: Tata Consultancy Services Ltd. Result Update Q3FY22
Particulars (In Rs. Cr.) Q3FY22 Q2FY22 Q3FY21 QoQ % YoY%
Revenue from Operations 48,885 46,867 42,015 4.31% 16.35%
Other Income 1,205 1,111 691 8.46% 74.38%
Total Income 50,090 47,978 42,706 4.40% 17.29%
Employee Benefit Expenses 27,168 26,384 23,431 2.97% 15.95%
Employee benefit Expenses as % of Sales 55.58% 56.30% 55.77% -1.28% -0.35%
EBIT 12,237 12,000 11,184 1.98% 9.42%
EBIT Margin 25.03% 25.60% 26.62% -2.23% -5.96%
Profit After Tax 9,769 9,624 8,701 1.51% 12.27%
PATM (%) 19.50% 20.06% 20.37% -2.77% -4.28%
EPS (in Rs. ) 26.41 26.02 23.19 1.50% 13.89%
Segment Revenue Q3FY22 Q2FY22 Q3FY21      QoQ %          YoY%
BFSI 18,998 18,445 16,655 3.00% 14.07%
Manufacturing 4,722 4,538 4,027 4.05% 17.26%
Retail and – Consumer Business 7,852 7,483 6,546 4.93% 19.95%
Communication, Media and Technology 8,254 7,733 6,980 6.74% 18.25%
Life Sciences and Healthcare 5,169 4,978 4,372 3.84% 18.23%
Others 3,890 3,690 3,435 5.42% 13.25%

Result Highlight: 

  • TCS Consolidated Revenue rose 4.3% QoQ and 16.3% YoY to Rs 48885 crore – above the estimates of Rs. 48481 Crore. In Constant Currency terms revenue grew by 15.4% YoY. Other income rose 8.4% QoQ and 74.3% YoY to Rs. 1205 Crore.

  • Operating Profit Margin contracted to 25% from 25.6% last quarter due to higher other expenses.

  • Net profit rose 12.3% YoY to Rs 9769 crore for the December quarter compared with Rs 8701 crore in the same quarter last year. Reported strong Cash from Operations at Rs. 10853 Cr. for Q3 which is 111.1% of Net Profit.

  • Attrition rate at 15.3% continues to be the lowest in the industry however increased from 11.6% in Q2FY22.

  • All Industry Verticals Grew mid to high teens.

  • All major markets showed strong growth, with North America continues to lead with (+18%) growth. UK grew (+12.7%), and Continental Europe grew (+17.5%). Among emerging markets, growth was led by India (+15.2%), and Latin America (+21.1%) followed by Middle East & Africa (+6.9%) and Asia Pacific (+4.3%)

  • New deal wins were $7.6 billion registered growth of 12% from the same quarter last year.

  • Client Addition: 10 New $100Mn+ Clients (total: 58); 21 new $50Mn+ clients (total: 118)

  • Added 28,238 employees on a net basis in Q3, taking its total employee base to 556,986 as of September 30

  • The company approved an interim dividend of Rs 7 per share.


Board of Directors has approved a proposal to buy-back upto 4,00,00,000 equity shares of the Company for an aggregate    amount not exceeding 18,000 crore being 1.08% of the total paid up equity share capital at 4,500 per equity share subject    to approval from shareholders.

Management commentary:

  • Commenting on the Q2 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: “Our continued growth momentum is a validation of our collaborative, inside-out approach to our customers’ business transformation needs. Page 2 of 11 Customers love our engagement model, our end-to-end capability, and our can-do approach to problem solving. While mapping out their innovation and growth journeys, we are also helping them execute new-age operating model transformations to support those journeys.”

  • N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: “We continued our focus on growing organically and on developing the talent, methodologies, and toolkits for an ever-evolving technology landscape. This, coupled with our contextual knowledge and the passion and commitment of thousands of TCSers enabled us to deliver cutting-edge solutions during the quarter, and help our clients realize speed to value. We are also delighted to cross another important milestone in our journey, hitting the $25 billion revenue mark in CY 2021.

  • Seeing signs of attrition bottoming out

  • Seeing a multi – year technology upcycle

  • Deal Pipeline to result in growth momentum continuing

  • Growth in new technology in primary focus

  • Migration to cloud well into middle phase


Tata Consultancy Services (TCS) reported revenue above the Street expectations in the quarter ended December 2021 however Profit was below the estimates. The Deal value of the company is broad based across markets and verticals and in line with the average of $7.8bn in the past.  TCS attrition rate spiked to 15.3% with whole industry witnessing higher attrition rate, still TCS attrition rate is lowest in industry. Adding investments in people, progressive HR policies and an empowering culture have made TCS the global industry benchmark in talent retention. Strong order book and robust deal pipeline will be the strong growth drivers for next 3 years with the company is on track for double-digit growth for FY22 and will benefit from 3 key spending themes: cloud transformation, customer experience, & core modernization. At the CMP of Rs. 3857, TCS is trading at PE multiple of 37.9x.  Valuing the company at 31.6x FY23E EPS, we recommend buy on TCS at CMP of Rs. 3857 for the Target Price of Rs.4500.

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