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TCS: Volumes drive a spectacular quarter

Apr 21, 2011

Tata Consultancy Services, (TCS) has announced the fourth quarter results of financial year 2010-2011 (4QFY11). The company has reported a 5.1% QoQ and 10.7% QoQ growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Net sales grew by 5.1% QoQ in 4QFY11, largely driven by 2.9% growth in volumes. For the year ended March 2011, sales grew by 24.3% YoY on account of strong volume growth of 29.7%.

  • Operating margins improve by 0.5% QoQ to 30.5% during the quarter as compared 30% during the previous quarter (quarter ended December 2010, 3QFY11). This was mainly due to slightly lower cost of sales (as a percentage of sales). For the full year FY11, operating margins increased to 29.9% from the 29.0% seen for the same period last year. This was on account of robust revenues growth and cost structure optimization.

  • Adds a net of around 11,700 employees during the quarter. Attrition rate currently stands at 14.4%, which is the same as that during previous quarter (3QFY11).

  • Net profit grows by 10.7% QoQ during the quarter. This was mainly driven by lower tax expenses during the quarter. For the full year FY11 (year ended March 2011), net profits increased by 29.5% YoY. This was mainly driven by the growth in revenues and other income, which offset the impact of higher depreciation charges and interest costs.

  • Adds 39 new clients during the quarter. The total number of active clients at the end of the quarter was 969.

  • Proposed a final dividend of Rs 8 per share (yield of 0.7%). Including this total dividend for the year would be Rs 14 per share (yield of 1.2%)

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