India’s biggest IT services company by market capitalisation Tata Consultancy Services Ltd. (TCS) said consolidated net profit for the first quarter ended June grew 5.2% to ₹9,478 crore from a year earlier. The company said it would focus on profitable growth in the coming quarters.
Net margin was at 18%. Revenue rose 16.2% to ₹52,758 crore while growth was 15.5% in constant currency (CC).
The North America market led with 19.1% growth in CC while among verticals, the retail segment expanded 25.1% in CC, the company said in a filing.
Operating margin, at 23.1%, contracted 2.4%. Stating that the quarter was challenging from a cost management perspective, Samir Seksaria, Chief Financial Officer, said the operating margin number “reflected the impact of the annual salary increase, the elevated cost of managing the talent churn and gradually normalising travel expenses.”
During the quarter, employees received salary increases of 5-8%, and top performers had received even bigger increments.
“However, our longer-term cost structures and relative competitiveness remain unchanged, and position us well to continue on our profitable growth trajectory,” he said.
The board announced a dividend of ₹8 per share, to be paid on August 3.
At the end of the quarter, the company had headcount of 606,331 including a net addition of 14,136 people during the quarter. IT services attrition was 19.7% on a trailing 12 months’ basis. The company said it planned to hire more than 40,000 people this year.
“We are starting the new fiscal year on a strong note, with all-round growth and strong deal wins across all our segments,” said Rajesh Gopinathan, CEO and MD said. “Pipeline velocity and deal closures continue to be strong, but we remain vigilant given the macro-level uncertainties,” he added.
“Our new organisation structure has settled in nicely, getting us closer to our clients and making us nimbler in a dynamic environment. Looking ahead, we remain confident in the resilience of technology spending and the secular tailwinds driving our growth,” he said.
N. Ganapathy Subramaniam, COO and ED said, “The investments we made on people, upskilling efforts and select lateral hiring et al helped manage the talent turnover with minimum impact on our operations. We are bringing in more of our associates back to our development centres, and it is steadily increasing at all levels.” Currently about 20% of the workforce is working from office.
Among industry segments, growth was led by retail and consumer packaged goods (25.1%), communications & media (19.6%), manufacturing (16.4%) and technology & services (16.4%). BFSI climbed 13.9% while life sciences and healthcare grew 11.9%.
Among major markets, North America led with 19.1% growth; continental Europe grew 12.1% while the U.K. rise 12.6%.
In emerging markets, India grew 20.8%, Asia Pacific rose 6.2%, Latin America increased 21.6%, and Middle East & Africa climbed 3.2%, the company said.
It said there was ‘strong, broad-based demand’ across the different services, led by Cloud, Consulting & Service Integration, Cognitive Business Operations and Enterprise Application.
