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TCS Q3 Results: Profit rises 4% QoQ to Rs 10,846 crore, misses estimates – Economic Times

() pleasantly surprised the Street with a 5.3% sequential rise in consolidated revenue for the quarter ended December to Rs 58,229 crore. The revenue was above the ET Now poll of Rs 56,893 crore.

The net profit rose nearly 4% on quarter to Rs 10,846 crore but was lower than the expected Rs 11,200 crore. The software major also announced a special dividend of Rs 67 per share and an interim dividend of Rs 8 per share.

In constant currency terms, revenue grew 13.5% year-on-year during the quarter, TCS said.

“We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and UK,” said Rajesh Gopinathan, chief executive officer and managing director.

TCS bagged deals worth $7.5 billion in the quarter, which was slightly lower than what it was in the preceding two quarters. In the first two quarters of the current financial year, the company bagged deals worth $8 billion.

“Looking ahead and beyond current uncertainties, our longer-term growth outlook remains robust,” Gopinathan said. For the second quarter in a row, TCS saw an improvement in operational performance. The operating margin, calculated as earnings before interest and tax (EBIT), expanded 50 basis points sequentially to 24.5%.

“Improved productivity, currency support and abating supply-side challenges helped expand our operating margin in Q3,” said Samir Seksaria, chief financial officer. “This gives us greater confidence in our ability to steer our profitability towards our preferred range while continuing to invest in building newer capabilities to support our growth and market share gains,” he added.


Among major markets, North America and the UK led the sales growth for the software major, rising more than 15%.

Both these markets make for 2/3rd of the total revenue for TCS and 3/4th of its profits.

Growth in Continental Europe was slightly moderate at 9.7%. In emerging markets, Latin America grew by over 14.6%, while India Asia Pacific, and Middle East & Africa grew by over 8-9%.

“The overall demand scenario has not changed significantly, and it will take a couple of months more to know what the decision-making is like by clients,” Gopinathan told reporters in a post-earnings conference.

While there is some caution seen in both North America and the UK, customers and industries have moved forward on decision-making, and there is no structural challenge in North America, Gopinathan said.

In terms of industries, banks, financial services, and insurance (BFSI), which make up a major part of TCS’ revenue, saw 11% growth in the December quarter.

The retail and CPG sector posted the highest growth at 19%, followed by Life Sciences and Healthcare verticals at 14.4%.

The communications and media vertical grew 13.5%, technology & services 13.6% and manufacturing 12.5%.

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