- 12 Apr 2022
- ICICIdirect Research
TCS reports strong TCV, attrition continues to be challenge
TCS - 4554 Change: 41.95 (0.93 %)News: The company reported dollar revenue of US$6,696 mn, up 2.6% QoQ, 11.8% YoY. In terms of revenue by geographies (in CC terms), North America market (52% of mix), grew +18.7% YoY while UK and Continental Europe reported relatively muted growth of +13% and 10% YoY, respectively. Vertical wise, BFSI, retail & healthcare grew 12.9%, 22.1% and 16.4% YoY. EBIT margin was flattish QoQ to 25% as there was -90 bps impact due to supply side pressure while it was mitigated by operating efficiency and +10 bps due to currency. The attrition was at 17.4% (up from 15.3% in previous quarter) and the company added 35,209 associates taking the total to 592,195. The company declared final dividend of Rs 22 per share. TCS reported TCV of US$11.3 bn for the quarter, adjusted to two large deals of US$1 bn each. TCV was at US$9.3 bn, up 22.4% QoQ, 1,1% YoY. The company guided for 40,000 fresher additions in FY23, which would help in pyramid optimisation
Views: While TCV for the quarter was at US$9.3 bn ( adjusted for two large deals), the company indicated that steady state deal wins could be in the range of US$8-8.5 bn per quarter. The demand outlook continues to be strong as clients continue to spend on cloud transformation programs. The supply side challenges pose a near to medium term risk as it would continue to put the pressure on EBIT margins (the management indicated long term aspirational margin band of 26-28%). We believe attrition could take longer to stabilise. Pricing could be only savior in this case but even costs pressure on the client's side may rule out accelerated pricing in our view and it would be more gradual in nature
Impact: Neutral