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TCS: Jump start to the year
Jul 13, 2012

Tata Consultancy Services (TCS) has announced the first quarter results of financial year 2012-2013 (1QFY13). The company has reported a 12.1% quarter-on-quarter (QoQ) growth in its consolidated sales and an 11.9% QoQ increase in its consolidated net profits. Here is our analysis of the results.

Performance summary
  • Net sales grew by 12.1% QoQ in 1QFY13, driven by a good growth in volumes of 5.3% QoQ during the quarter. The growth in sales was also aided by the rupee depreciation during the quarter.
  • The growth in revenues was 4.0% QoQ on constant currency basis. In terms of US dollar revenues, the growth in sales was 3.0% QoQ during the quarter.
  • Operating margins declined marginally by 0.2% QoQ to 27.5% during the quarter as compared to 27.7% seen during the previous quarter (ending March 2012). This was mainly due to higher cost of revenues which offset the positive impact of lower 'selling, general and administrative' expenses (both as a percentage of sales).
  • Despite the margin contraction at operating levels, net profits grew by 11.9% QoQ during the quarter. The growth in net profits was aided by higher other income during the quarter. Profits would have been higher if not for higher effective tax rate during the quarter. The effective tax rate was 22.2% during the quarter as compared to 21.6% seen during previous quarter (4QFY12).
  • TCS added a net of 4,962 employees during the quarter. The total headcount of the company is 243,545 at the end of 1QFY13.
  • Attrition rate currently stands at 10.9% in IT services segment, lower than the 11.1% seen during the 4QFY12. In the BPO segment, attrition came down to 20.7% as compared to 21.6% seen during 4QFY12.
  • The company added 29 new clients during the quarter. The total number of active clients at the end of the period was 1,032.
  • Proposed an interim dividend of Rs 3 per share (yield of 0.2%).

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