TCS Q4 FY22 Results: What to expect

One of India’s technology bellwether stocks announces its quarterly results for the fourth quarter ended Mar-22 on 11th April, along with its annual results for FY22. Unlike the other technology companies, TCS has always refrained from giving any guidance on either the top line or the bottom line.

However, here is what one can broadly expect from the Q4 results, when it is expected to announce post trading hours on Monday 11th April.

1) Revenues are expected to grow in the quarter at 12% on a YoY basis to Rs.50,670 crore. This will be the first time that TCS would cross quarterly revenues of Rs.50,000 crore. In Q4 ended Mar-22, TCS is also expected to scale the Rs.10,000 crore mark on net profits with expected profit growth at the rate of 9% on a YoY basis.
 

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2) The third quarter was a tough quarter in terms of margins on the back of higher manpower costs and persistent attrition. For the fourth quarter, the EBIT is expected to grow by nearly 9% on a YoY basis.

However, EBIT margins are expected at around 25.3% compared to 27% in the year ago period in Mar-21 quarter. However, EBIT margins will be slightly better on a sequential basis compared to the Dec-21 quarter.
 

3) The dollar growth in top line is likely to be impacted negatively by around 60 basis points due to the impact of cross currency movements.

That is the negative equation of two international currencies like dollar and Euro, since TCS has receivables in both these currencies. Rupee growth in revenues will be better than constant currency growth.

4) Since the revenue growth for Q4 is likely to be in double digits, that would be reflected in most of the key verticals.

Key TCS verticals like Retail, CPG, BFSI, manufacturing, technology and Life Sciences; which grew top line at over 16% in the third quarter are likely to maintain growth of more than 15% in Q4, even on an enhanced base.

5) In the third quarter, TCS had recruited over 28,000 new employees on a net basis and the fourth quarter is likely to better that figure with the company drawing a big focus on recruiting freshers.

The metrics to watch out will be the rate of attrition, which was uncharacteristically high at 15.3% in the Q3. The level of attrition is likely to show a slightly improvement in the fourth quarter.

With double digit top line growth and around 9% bottom line growth, TCS would be able to maintain and justify its premium valuations.