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TCS: Fair performance across the board
Apr 17, 2013

Tata Consultancy Services (TCS) has announced its fourth quarter results for financial year 2012-2013 (4QFY13). The company reported a 2.2% quarter-on-quarter (QoQ) growth in its consolidated sales and a 1.8% QoQ increase in its consolidated net profits. Here is our analysis of the results.

Performance summary
  • Net sales grew by 2.2% QoQ in 4QFY13. This was aided by a sequential volume growth of 4.4%.
  • Operating margin decreased by 1% QoQ to 26.3% during the quarter as compared to 27.3% seen during the previous quarter (3QFY13). That was because of a 13.2% QoQ rise in 'Other/Sundry Expenses' along with 3.1% QoQ rise in 'Overseas Business Expenses' and a 1.7% QoQ rise in 'Employee Benefit Expenses'.
  • Net profits grew by 1.8% QoQ on an absolute basis and the net profit margin dropped marginally to 22% from 22.1% witnessed in the last quarter. While Operating Profit (EBIT) fell by 1.2% QoQ, the rise in 'Other Income' by 98.6% QoQ helped in increasing the absolute amount of Net Profit by 1.8%. The rise in net profits would have been even higher if not for the sequential increase in effective tax rate from 21.8% at the end of 3QFY13 to 23% at the end of 4QFY13.
  • TCS added a net of 12,559 employees during the quarter. The total headcount of the company was 276,196 at the end of 4QFY13.
  • Overall attrition rate including BPO dropped from 11.2% at the end of 3QFY13 to 10.6% at the end of 4QFY13.
  • Utilisation (excluding trainees) remained high at 82%.
  • The Company proposed a final dividend of Rs 13 per share (dividend yield of 0.9%).

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