TCS Q3 operating profits up 12.13%

Tata Consultancy Services (TCS) reported 5.42% growth in Dec-20 quarter top line revenues yoy at Rs42,015cr.

TCS reported 5.42% growth in Dec-20 quarter top line revenues yoy at Rs42,015cr. The company has seen robust top line growth on the back of large order wins as well as a continued focus on digital business and a great shift towards SAAS solutions. Revenues also benefited from robust technology spending globally.

For the Dec-20 quarter, the operating profits were sharply up 12.13% at Rs11,184cr. This growth was achieved on the back of better and sharper focus on high value customers as well as the cost control steps paying off, despite higher manpower costs. This resulted in the operating margin or OPM expanding from 25.03% in the Dec-19 quarter to 26.62% in Dec-20 quarter; a sharp bounce of 160 bps YOY and 42 bps on a QOQ basis.

Profit after tax (PAT) for the Dec-20 quarter was up 7.17% at Rs8,727cr. This resulted in the PAT margins for the Dec-20 quarter expanding by 34 bps to 20.77%. TCS also declared an interim dividend of Rs.6 per share which translates into 600% on its face value of Rs.1.

Financial highlights for Dec-20 compared yoy and sequentially

Tata Consultancy Services Ltd
Rs in Crore Dec-20 Dec-19 YOY Sep-20 QOQ
Revenues 42,015 39,854 5.42% 40,135 4.68%
Operating Profit 11,184 9,974 12.13% 10,515 6.36%
Net Profits 8,727 8,143 7.17% 7,504 16.30%

Diluted EPS (Rs) ₹ 23.19 ₹ 21.63 ₹ 19.93
OPM 26.62% 25.03% 26.20%
Net Margins 20.77% 20.43% 18.70%

Key takeaways from the Dec-20 quarter results

  • The all round growth in revenues and profits was largely driven by higher demand during the December quarter. TCS also reported the lowest employee attrition in the IT services business at 7.6% in the Dec-20 quarter.

  • In terms of specific verticals, the manufacturing practice grew by 7.1%, Life sciences & healthcare by 5.2%, Communication & Media by 5.5% and BFSI at 2.2% on a sequential basis over the Sep-20 quarter. Overall, BFSI dominates total business.

  • In terms of the geographical growth, North American grew by 3.3%, UK by 4.5%, Continental Europe by 4.5% and India by 18.1%. Other markets across Asia and Latin America also showed positive growth.