The IT services industry has only just begun to see a multi-year tech upgradation cycle, and Tata Consultancy Services (TCS) is well positioned to capture the potential.
This was the key message from the top brass of TCS at its 26th annual general meeting (AGM) that was held virtually.
The onset of the pandemic in March last year had initially hit the industry. However, it staged a remarkable recovery as enterprises undertook several technology-led initiatives to connect with their customers amid the nationwide lockdown.
Addressing shareholders at the meeting, TCS chairman N. Chandrasekaran said after a poor start to 2020-21, TCS quickly recovered to post a sharp growth over the next nine months following the initial lockdown related disruptions. The company ended the year on a robust note with better market share, industry-leading profitability and record order book.
During the fiscal, its consolidated revenue grew around 5 per cent in rupee terms to Rs 1,64,177 crore even as operating margins were at an industry leading 25.9 per cent.
The TCS chief added that the company has weathered the pandemic very well and has emerged stronger because of the agility, resilience and adaptability of its delivery model.
He pointed out that during the year, enterprises adopted various technology initiatives as they wanted to shift to digital channels and contactless interactions with their customers.
“The company is very well positioned to benefit from this multi-year technology upgradation cycle, and help customers translate their transformative visions into reality,’’ Chandrasekaran said.
TCS managing director and CEO Rajesh Gopinathan also said that the company delivered industry leading operating margins during the year and that it is just witnessing the start of a multi-year tech upgradation cycle.
For the year, the board of directors of TCS recommended a final dividend of Rs 15 per share, taking the total pay-out to Rs 38 per share.
The TCS chairman added that it has also completed a Rs 16,000-crore share buyback at Rs 3,000 per equity share.
Both combined, there has been an aggregate outflow of Rs 33,873 crore through dividends and buyback, or a pay-out of 95 per cent of the free cash flow.
According to Chandrasekaran, investors have got a return of over 3000 per cent on TCS shares since its initial public offering in 2004.
“Looking back, if an investor had invested in one TCS share at the issue price of Rs 850 in the maiden offer in 2004, the value of that investment today in a period of 17 years, would be around Rs 28,000, a return of over 3,000 per cent on your investment,’’ Chandrasekaran said.