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TCS Q1 Review - Growth, Margin Reverting To Pre-Covid Average: ICICI Securities

TCS Q1 Review - Growth, Margin Reverting To Pre-Covid Average: ICICI Securities



Employees walk along a corridor as others gather in a rest area at a Tata Consultancy Services Ltd. (TCS) campus. (Photographer: Dhiraj Singh/Bloomberg)
Employees walk along a corridor as others gather in a rest area at a Tata Consultancy Services Ltd. (TCS) campus. (Photographer: Dhiraj Singh/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Even adjusting for Covid-19 second wave impact on India business (5.6% of revenues in March-2021, ~14% QoQ decline), Tata Consultancy Services Ltd.’s growth in Q1 FY22 would have been around ~3.1% QoQ (constant currency).

Notably, this is softer than its pre-Covid five-year average growth in June – seasonally the strongest quarter.

This further supports our key argument on the sector, i.e. once the low base effect wanes, growth should converge with the pre-Covid-19 long-term average.

Europe (~17% of revenues in March-21, up 1.5% QoQ) remained a key overhang on growth.

Order booking ($8.1 billion versus $9.2 billion in March-21) remained healthy though there were no large deals (more than $500 million) for two to three quarters now.

Click on the attachment to read the full report:

ICICI Securities TCS Q1FY22 Results Update.pdf

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