Result Analysis: Tata Consultancy Services Ltd. Result Update Q2FY22


Particulars (In Rs. Cr.) Q2FY22 Q1FY21 Q2FY21 QoQ % YoY%
Revenue from Operations 46,867 45,411 40,135 3.21% 16.77%
Other Income 1,111 721 914 54.09% 21.55%
Total Income 47,978 46,132 41,049 4.00% 16.88%
Employee Benefit Expenses 26,384 25,649 22,665 2.87% 16.41%
Employee benefit Expenses as % of Sales 56.30% 56.48% 56.47% (18) bps (17) bps
EBIT 12,000 11,588 10,515 3.56% 14.12%
EBIT Margin 25.60% 25.52% 26.20% 8 bps (60) bps
Profit After Tax 9,624 9,008 7,475 6.84% 28.75%
PATM (%) 20.53% 19.84% 18.62% 70 bps 191 bps
EPS (in Rs. ) 26.02 24.35 19.93 6.86% 30.56%
Segment Revenue Q2FY22 Q1FY21 Q2FY21 QoQ % YoY%
BFSI 18,445 18,151 16,138 1.62% 14.30%
Manufacturing 4,538 4,399 3,826 3.16% 18.61%
Retail and – Consumer Business 7,483 7,171 6,353 4.35% 17.79%
Communication, Media and Technology 7,733 7,412 6,560 4.33% 17.88%
Life Sciences and Healthcare 4,978 4,899 4,160 1.61% 19.66%
Others 3,690 3,379 3,098 9.20% 19.11%

Result Highlight:

  • TCS Consolidated Revenue rose 3.2% QoQ and 16.8% YoY to Rs 46867 crore – lower than the estimates of Rs. 47466 Crore. Other income rose 54% QoQ to Rs. 1111 Crore.

  • Operating Profit Margin expanded to 25.6% from 25.5% last quarter due to the lack of wage hike.

  • Net profit rose 28.8% YoY to Rs 9624 crore for the September quarter compared with Rs 7475 crore in the same quarter last year. Reported strong Cash from Operations at Rs. 9945 Cr. for Q2 which is 103.3% of Net Profit.

  • Attrition rate at 11.6% continues to be the lowest in the industry however increased from 8.6% in Q1FY21.

  • All Verticals Grow 15%+ YoY; BFSI crosses $2 Bn in Quarterly Revenue Run Rate

  • All major markets showed strong growth, with growth led by North America (+17.4%). UK grew (+15.6%), and Continental Europe grew (+13.5%). Among emerging markets, growth was led by India (+20.1%), followed by Latin America (+15.2%), Middle East & Africa (+13.8%) and Asia Pacific (+7.6%)

  • New deal wins were $7.6 billion, taking the total deals to $15.7 billion in the first half of the year. Strong Client Addition: 5 New Clients (total: 54) in $100Mn+; 17 new clients (total: 114) in $50Mn+

  • Added 19,690 employees on a net basis in Q2, taking its total employee base to 528,748 as of September 30
  • The company approved an interim dividend of Rs 7 per share.

  • Approved the re-appointment of Mr. Rajesh Gopinathan as CEO and MD for a term of five years from February 21, 2022 to February 20, 2027 and Mr. N Ganapathy Subramaniam as Chief Operating Officer and Executive Director from February 21, 2022 to May 19, 2024.

Management commentary: 

  • Commenting on the Q2 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: “The strong and sustained demand environment is a once-in-a-decade opportunity to position ourselves as the preferred growth and transformation partner for our customers. We are using the growth tailwind to invest in strengthening relevant capabilities and building out a comprehensive portfolio of offerings that caters to a broader set of stakeholders in the enterprise across business cycles, strengthening our brand, and making our business more resilient.

  • N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: “We are pleased with our overall delivery performance during the quarter, where several large complex programs across verticals went live, thanks to the passion, energy, and commitment of our people. These include programs such as contactless payments, card-less withdrawal of cash from ATMs for leading banks, space-range-display transformation for retailers, one of the largest application transformations to public cloud native architecture, all leveraging our automation led G+T framework, agile methods and toolkit.”

  • Guidance: Company is confident of achieving its aim of a double-digit revenue growth for the year

  • Operating margin expansion came despite higher expenses, increased currency headwinds and higher sub-contractor usage. The company’s long-term cost structures are well placed to maintain margins. Volatility in supply-side challenges can have a short-term impact.

  • Saw the advantage of proactive hiring in the second half of FY21, which gave it the ability to overcome supply-side challenges in Q2.

  • Attrition levels will continue for the next 2-3 quarters but it is trying to offset that by ramping up hiring and accelerating the rate at which new joinees are shifted from training rooms to the projects.


Tata Consultancy Services (TCS) reported revenue below the Street expectations in the quarter ended September 2021 however Profit growth was strong on YoY basis which was almost in line with 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 services attrition rate is still lowest in industry at 11.6 percent. 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. 3943, TCS is trading at PE multiple of 40x.  Valuing the company at 34.5x FY23E EPS, we recommend buy on TCS at CMP of Rs. 3943 for the Target Price of Rs.4550.

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