How did you see TCS results for the third quarter ended Dec 2021?

For the Dec-21 quarter, TCS reported 16.4% yoy growth in revenues at Rs.48,885 crore. Even on a sequential basis, compared to Sep-21 quarter, revenues were up by 4.31%. Interestingly, the biggest growth thrust came from the North American region which saw 18% growth in the quarter. North America still remains their largest market in terms of revenues.

The quarter was about giving a boost to the top line via client accretion. In the Dec-21 quarter, TCS added 10 bulge bracket clients who would fall in the premium $100 million plus category. In addition, it also added 21 clients in the $50 million plus bracket. TCS also announced its buyback program worth Rs.18,000 crore with the buyback price at Rs.4,500 per share. The record date for the buyback is yet to be announced.

In terms of sector wise practice channels, the retail/CPG vertical grew 20.4%, BFSI by 17.9%, Manufacturing 18.3% and the technology and services vertical grew 17.7%. Apart from North America growing 18%, other regions also showed good growth like continental Europe at 17.5% and UK at 12.7%. The small Indian market was also up by 15.2%

Operating profits were up 9.42% at Rs.12,237 crore but the pressure was visible with OP growing slower than revenues. It was all about operating cost pressures with specific reference to costs like travel, manpower and sub-contracting costs, which surged during the quarter. Operating margins contracted t159 bps yoy and despite the attrition of TCS being the lowest in the IT industry, it still high in absolute levels at 15.3%.

Profit after tax (PAT) for the Dec-21 quarter was up 12.27% at Rs,9,769 crore due to the operating cost spill over. As a result, the PAT margins narrowed from 20.71% to 19.98% over the previous Dec-20 quarter.