TCS third-quarter net profit rises 11 per cent to ₹10,846 crore: Report

India’s largest IT services company TCS net profit up 11 percent in December quarter 10,846 crore, restricted by low profit margins, but seemed optimistic about the deal pipeline.

In a multi-year first, the company reported a slight decline in its employee base, which had long been growing steadily, but made it clear that this was not due to a demanding environment, and said it was looking to increase its employee base to 1.50 percent. Will make appointments. lakh people in the next financial year.

The board of Tata group company also declared dividend payment 75 per share including special dividend 67 per share, resulting in an outflow of 33,000 crore cash.

Its total revenue increased by 19.1 percent 58,229 crore for the quarter under review, but it was a 0.5 percent decline in operating profit margin to 24.5 percent which limited overall profit growth.

Its chief executive and managing director Rajesh Gopinathan told reporters it was more confident about North American and British operations, which account for two-thirds of its revenue, but there were short-term uncertainties, and it was Europe that would be closely monitored. Is required. Because geopolitical tensions deter customers from spending on IT.

Chief operating officer N Ganapathy Subramaniam said the deal pace and pipeline look good, and the overall position on technology spend remains intact even in this environment.

On the new deals front, the company reported a total contract value of USD 7.9 billion for the quarter, which Gopinathan said is in the mid-range of the USD 7-9 billion target.

Gopinathan attributed the revenue growth during the quarter to cloud spending by customers and clarified that its customers are not affected by the overall trend of companies revisiting hyperscalers.

He also said the company gained market share through vendor consolidation, but declined to comment or share information about competing companies it had left behind to win business.

Chief financial officer Samir Seksaria said rising costs arising from third-party costs and normalcy of operations impacted profit margins and said it would exit FY2023 with an operating profit margin of 25 per cent, which The financial year is due to end 2022. ,

He added that the company has the necessary levers to expand margin bands, including mitigating supply-side challenges, which have also resulted in higher payouts to hire or retain employees and pricing of deals over the past few quarters. .

Its total workforce decreased by 2,197 people to 6.13 lakh employees, making it the first quarter decline in many years. The company’s chief human resources officer Milind Lakkad said the decline was due to the overall number of people leaving the company being higher than the number of new hires from campuses and laterals.

It has hired 42,000 freshers in the first three quarters of the fiscal, and may hire a few thousand more in the last quarter, he said, adding that it will continue the trend of hiring 40,000 freshers in FY24, while Gopinathan Said it would hire. 1.25-1.50 lakh people in FY24 as well.

Lakkad said the decline in overall staffing is due to investments made through higher recruitment in FY22 and is not at all linked to the demand environment. He added that this should be seen as a case where the staff is being used more efficiently.

Subramaniam said seasonal furloughs, which are typically prominent in the third quarter, had some impact on the business but were in line with expectations, adding that the Asia Pacific business contributed the most.

Overall, the banking, financial services and insurance sector, which is the largest industry vertical for the company, has grown well and the company has no major concerns in this segment, though insurance has shown some softness, Subramaniam said. Said that USD 2.5 billion in TCV came from the sector.

The COO said that Indian banks are piloting Metaverse solutions, but we are far away from implementing it at the customer level. Lenders.

Gartner analysts said, “TCS has shown flexibility in aligning its delivery towards the customer’s expected business outcome and a commitment to driving value for money. This has enabled it to drive comparably superior industry benchmarks in terms of fiscal performance.” I have been helped.” the research firm said.

The company’s stock closed with a gain of 3.35 per cent. 3,319.70 points on the BSE on Monday against a gain of 1.41 per cent on the benchmark.

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