TCS reports strong CC revenue, margin weakTCS - 2982 Change: -25.35 (-0.84 %)
News: TCS reported strong numbers on revenues in CC while margins were weak. The company reported 3.5% QoQ/15.5% YoY CC revenue growth for the quarter while due to cross currency headwinds of 220 bps, dollar revenue was only 1.3% QoQ. In terms of revenues by geographies (in CC terms), the North America market (53% of mix), grew 19.1% YoY while UK and Continental Europe reported relatively muted growth of +12.6% and 12.1% YoY, respectively. Vertical wise in CC terms, BFSI, retail & grew 13.9% & 25.1% YoY respectively while manufacturing, technology & services grew by 16.4% each. EBIT margins declined 186bps QoQ, 150bps impact from wage hikes while rest due to increase in subcontracting costs and travel costs. Attrition increased 230bps QoQ to 19.7%.
Views: The company reported strong revenue growth for the quarter. The demand continue to be robust from US market as tech spends are intact so far while in UK market , client conversations are being revolved around high inflation there, so there could be some moderation of revenues going forward in the region. EBIT margins are likely recover in Q2FY23 but continued higher attrition (especially onsite) likely to push costs up in the coming quarters. Deal TCV on like to like basis was down in both QoQ and YoY, but it is expected to pick up as the company hinted at US$7-9bn TCV range going forward. Employee addition moderated especially on freshers but Q1 is seasonally weak in fresher additions as freshers go for higher studies.