TCS reports 11% rise in net profit at Rs 10,846 crore; declares Rs 75 as dividend

India’s largest IT services exporter Tata Consultancy Services (TCS) has reported an 11% rise in net profit for the third quarter of the current fiscal year, thanks to strong revenue growth and cost managment.

TCS reported a net profit of Rs 10,846 crore for the three months ending December 31, 2022. In comparison, net profit a year ago stood at Rs 9,769 crore.

Considered the bellwether for the Indian IT services industry, TCS also registered a 19.1% rise in revenue for the third quarter at Rs 58,229 crore. A year ago, the revenue was Rs 48,8850 crore.

“We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and the UK," said TCS CEO & MD Rajesh Gopinathan.

He further added that the long-term growth outlook remains robust despite the present uncertainties.

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TCS also declared a total dividend of Rs 75 per share which also includes Rs 67 as a special dividend.

The October to December period is traditionally considered a weak one for the Indian IT services industry due to the holiday season in key markets like North America and Western Europe.

Added to this, both these geographies are facing economic uncertainties with rising inflation rates giving way to a slowdown. This has raised doubts about whether Indian IT companies could sustain a double-digit growth rate.

The operating profit margin for the quarter stood at 24.5% which is a contraction of 0.5 percent on a year-on-year basis.

"Improved productivity, currency support and abating supply-side challenges helped expand our operating margin in Q3. This gives us greater confidence in our ability to steer our profitability towards our preferred range, while continuing to invest in building newer capabilities to support our growth and market share gains," TCS CFO Samir Seksaria said.

According to TCS, the total order book at the end of the quarter stood at $7.8 billion. The growth during this period was led by cloud, cyber security, consulting and enterprise application services. The North America and UK market grew by over 15.4% while it was 9.7% plus from continental Europe.

Among the industries which powered its growth during the quarter were retail & CPG, life sciences & healthcare, communications & media, manufacturing and BFSI.

The total headcount of TCS at the end of the quarter stood at 613,974 and attrition rate was 21.3 percent.