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10 Key Takeaways from TCS 4QFY22 Results
10 Key Takeaways from TCS 4QFY22 Results

April 12, 2022

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  1. Revenue Growth - Revenues Grew 2.6% QoQ; 11.8% YoY in 4QFY22; Revenues Grew 15.9% YoY in FY22; Highest Ever Incremental Revenue in a Year: $3.533 Bn
  2. Digital Remains a Key Driver - The growth was led by cloud, cyber security, enterprise application services, IoT and Digital engineering
  3. Strong Deal Pipeline - Highest Ever Order Book TCV: $11.3 Bn in Q4FY22; $34.6 Bn in FY22
  4. Stable Margins - Operating Margins remained stable this quarter at 25%; 25.3% for FY22 (25.9% in FY21, declined by only 60 bp in spite of the sharp rise in costs this year)
  5. Strong Employee Growth - Highest ever net addition of 103,546 for FY22 - Closing headcount: 592,195; 35,209 net addition during the quarter (all-time high in a quarter)
  6. Broad based growth across geographies as well as verticals

Geographies (qoq in USD):
- North America +4.5%
- UK +2.6% // Cont Europe -0.6%
- Asia +1.4% // India -4.8% qoq

Verticals: (qoq in USD)
- BFSI +2.0% // Retail +4.7% // Comms +5.8% // Manufacturing +3.7%
- Lifesciences +3.7% // Tech +2.6%
- Regional Markets -0.2%

  1. Pricing Improvement – The company highlighted that they are witnessing pricing improvement in renewals and new contracts.

 

  1. Attrition remains a key challenge - LTM attrition at 17.4% in IT Services (vs 15.3% in 3Q). Though it has started flattening for the company on a month on month basis. They expect attrition to remain high at current levels for the next 2-3 quarters (in reported terms) and expect to moderate thereafter.

 

  1. Positive Outlook
      • Highest ever deal pipeline bodes well for FY23. Management highlighted multi-year high growth environment with tech spends being prioritized. However, margins are expected to be volatile in the near term. For FY23E, TCS management expects margins to remain volatile and under pressure due to tight labor market but in the medium to longer term is still sticking to its 26-28% margin band. 
      • Focus on freshers to remain a key hiring strategy in the longer-term. Target to hire 40K freshers in FY23.

Overall, the company is expected to cross revenues of INR2 Lakh crore in 2022 and over 6 lakh employees in 2022.

 

  1. Hybrid working model - TCS is currently operating at 95% of employees WFH and 5% from office. Their senior associates (c.50K) have been asked to come to office for 3 days a week. TCS will gradually move to 80:20 ratio in coming months around Work From Home:Work From Office.

 


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Neha Jain
Senior Analyst

Neha Jain

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