Tata Consultancy Services (TCS), the largest provider of IT services in India, launched the earnings season on Monday by announcing a less-than-expected 11% increase in profit for the December quarter at 10,846 crore. The company’s third quarter earnings was predicted by analysts to be above 11,000 crore, on average.
However, the company’s rupee revenue for the third quarter of the current fiscal year increased by 19.1% to 58,229 crore from 48,885 crore compared to the same period last year. This growth was driven by increases in cloud services, cyber security, consulting services, and enterprise application services. However, the company’s revenue increase in constant currency was 13.5% YoY as opposed to 15.4% in the same time previous year.
While IT services companies in India stood to gain from the rising post-covid demand for digitization in the September quarter, the December quarter is typically a seasonally-weak one for the sector. On the operational front, EBIT (earnings before interest and tax) rose 16.7% to ₹14,284 crore in FY22 against ₹12,237 crore seen during the same period previous year. The company’s EBIT margin, however, contracted 50 basis points (bps) to 24.5% versus 25% y-o-y, owing to seasonality. One bps is one-hundredth of a percentage point.
The company announced a dividend of ₹75 per share (2.3% of CMP) which includes a special dividend of ₹67 and an interim dividend of ₹8.