TCS ends FY 2023 with a bang: reports 17.6% YoY growth

Tata Consultancy Services (TCS), has reported strong financial results for the full year ending March 31, 2023. The company's order book total contract value (TCV) for the fiscal year stood at $34.1 billion, with a fourth-quarter TCV of $10 billion, marking an all-time high in the number of large deals.

The company's revenue for the full year was Rs 2,25,458 crore, a 17.6% year-over-year (YoY) growth, led by North America, the UK, and India, which saw growth rates of 15.3% led by North America, the UK, and India, which saw growth rates of 15.3%, 15%, and 14.6%, respectively. The company's operating margin was 24.1%, and its net margin was 18.7%. Its net income for the year was 42,147 crore, a 10% YoY growth.

Increasing Employee Headcount

TCS also reported strong employee metrics, with a net addition of 22,600 employees and a total employee headcount of 614,795. The company has a diverse workforce, with employees from 150 nationalities, and 35.7% women. The company claims that its talent development initiatives have resulted in the acquisition of approximately 6 million digital competencies and 62,000 Contextual Masters.

Rajesh Gopinathan, Chief Executive Officer and Managing Director said: “It is very satisfying to look back at our strong growth in FY 2023, on top of the mid-teen growth in the prior year. The strength of our order book demonstrates the resilience of demand for our services and gives us visibility for growth in the medium term."

Q4 Revenue: 16.9% YoY growth

TCS's shareholder payout for the fiscal year was Rs 45,602 crore in the form of dividends, with a proposed final dividend per share of 24. The company's revenue for the fourth quarter was Rs 59,162 crore, a 16.9% YoY growth, with an operating margin of 24.5% and a net margin of 19.3%. The company's net income for the quarter was Rs 11,392 crore, a 14.8% YoY growth.

TCS's client metrics showed strong performance, with 60 clients in the $100 million+ band, 133 clients in the $50 million+ band, 291 clients in the $20 million+ band, 461 clients in the $10 million+ band, and 1241 clients in the $1 million+ band. The company's IT services attrition (LTM) stood at 20.1%.

TCS's free cash flow for the fiscal year was `41,440 crore, and its strong cash conversion saw operating cash flow at 104.1% of net income.

TCS's stronghold

The company's growth was led by the Retail and CPG (+13%) and Life Sciences and Healthcare (+12.3%) sectors in the fourth quarter. Other verticals, including Technology & Services, BFSI, Manufacturing, and Communications & Media, grew in the single digits.

On a full year basis, Retail and CPG (+19.7%) and Communications & Media (+14%) were the top performers, while all other verticals showed growth in a narrow band around the company average. Technology & Services grew 13.7%, Life Sciences and Healthcare grew 13.3%, Manufacturing grew 13%, and BFSI grew 11.8%.

Markets

In terms of markets, the UK led the growth in the fourth quarter with a growth rate of 17%. North America grew 9.6%, while Continental Europe grew 8.4%. Among emerging markets, Latin America grew 15.1%, India grew 13.4%, Middle East & Africa grew 11.3%, and Asia Pacific grew 7.5%.

On a full year basis, North America grew 15.3%, UK grew 15%, and Continental Europe grew 11%. In emerging markets, Latin America grew 17.3%, India grew 14.6%, Middle East & Africa grew 7.8%, while Asia Pacific grew 7.6%.

Service Portfolio

TCS's services portfolio was led by Cloud, Cyber Security, Enterprise Application Services, and Cognitive Business Operations. In a challenging environment, clients carefully calibrated spends, prioritizing cost optimization, vendor consolidation, and automation initiatives. In-flight technology transformation initiatives continued to be funded but with the expectation of earlier and higher RoI.