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PremiumTCS Q3 Results Live Updates: Tata Consultancy Services (TCS), the largest IT services company in India, disclosed financial results for the quarter ending December 2023, surpassing revenue expectations but falling short on the bottom line.
The leading Indian software service provider achieved a 2% year-on-year (YoY) growth in consolidated net profit, reaching ₹11,058 crore, while revenue experienced a 4% increase, totaling ₹60,583 crore. Analysts' projections had anticipated revenue at ₹60,119 crore and a profit of ₹11,446 crore.
Additionally, the board recommended a special dividend payout of ₹18 per share and an interim dividend of ₹9 per share.
Sequentially, the revenue demonstrated a 1.5% increase, while the profit saw a 2.5% decline. TCS attributed this profit decline to a one-time charge of ₹958 crore incurred during the quarter for the settlement of a legal claim, which had an adverse impact on the bottom line.
The earnings before interest and taxes or EBIT margin was 25%, against 24.3% a quarter ago. The company secured contracts totaling $8.1 billion in the third quarter, marking a decrease from the $11.2 billion in deals it had acquired in the preceding September quarter.
"This quarter saw strong growth in our services across industry verticals. Clients continued to focus on identity and access management, security operations, cloud, and data security engagements. We are also seeing good traction for our services in Post Quantum Cryptography and Cloud Investigation & Response Automation."
" During this quarter, we saw significant demand for migration, modernization, and business transformation opportunities on cloud platforms. We also saw increased demand for data on cloud with enterprises seeking to harness the capabilities offered by both cloud and Gen AI. The demand for Gen AI is being driven by "Assist" and "Augment" use cases addressing the need to augment operations and personalize experiences across all industry segments. This quarter we launched our AI Experience Academy to provide Innovation and experimentation opportunities to TCS associates on multiple Gen AI technologies. We continue to deepen our partnerships with the hyperscalers as well as other important AI technology players."
“We're working on a few large deals that could convert into mega deals. The qualified pipeline is increased and we are working on many such opportunities," Subramaniam said.
K Krithivasan, CEO and MD at TCS said at the press conference, “The deals we signed or programmes we started since the beginning of the year are going as per planned. There aren't any delays, however, there could be some operational delays. No delays in terms of clients repriortising the prgrammes from the beginning of the year."
“TCS' Q3 earnings and margins beat street estimates. We were expecting a flattish revenue growth in rupee terms while the company reported earnings that came above expectations. The best thing is despite a seasonally weak quarter with macro-economic headwinds, TCS performed very well on most earnings parameters. Technically, TCS stock can cross its resistance above 3800 and stay above this level with an optimistic view for the short term."
"Decent results from TCS Especially on the margin front However, the fall in order bookings is a concern. Technically, 3700–3600 is a strong demand zone. 3800–3850 is a supply zone. We can expect a range-bound move for some time; above 3850, we can expect momentum to pick up.
Infosys results are mostly in line, without any major surprises. Technically, 1480–1460 will be a demand zone, while 1540–1560 is a resistance zone."
“The vibrancy and energy levels in our offices are increasing as more and more of our employees are back in the offices. We expect to be back to our normal operating mode by the end of the current fiscal year. We are committed to hiring from college campuses and growing talent organically. We have commenced our campus hiring process for the next year and see tremendous excitement among freshers to join TCS," Milind Lakkad, Chief HR Officer, said while adding that the company still stands at the plan for hiring 40,000 freshers in FY24.
TCS reported deal total contract value (TCV) of $8.1 billion, down from $11.2 billion in the previous quarter. This is also below TCS’ quarterly guidance range of $9-10 billion.
“The vibrancy and energy levels in our offices are increasing as more and more of our employees are back in the offices. We expect to be back to our normal operating mode by the end of the current fiscal year. Parallelly, attrition is trending down and at 13.3%, is now in our range of comfort. We are committed to hiring from college campuses and growing talent organically. We have commenced our campus hiring process for the next year and see tremendous excitement among freshers to join TCS."
In terms of industry growth, the Energy, Resources, and Utilities sectors were the frontrunners, experiencing an 11.8% increase. Manufacturing followed with a 7.0% growth, and life sciences and healthcare saw a growth of 3.1%.
On the other hand, the Consumer Business Group (CBG) showed a slight decline of 0.3%, while BFSI, Communications & Media, and Technology & Services experienced more significant decreases at 3.0%, 4.9%, and 5.0%, respectively.
As of December 31, TCS reported a total workforce of 603,305 employees. The attrition rate for its IT services decreased to 13.3% over the last twelve months, marking a decline from the 14.9% recorded in the previous quarter.
“The quarter saw us make significant progress in many projects of national importance, demonstrating our execution strength. Our products and platforms had a strong quarter with new wins and go-lives. The MCX platform is scaling well and processing record transaction volumes. We are on course with the BSNL 4G/5G network roll out. We are making good progress in upskilling our employees in Generative AI through our AI playground platform."
Among major markets, the United Kingdom topped the chart with 8.1% growth; Continental Europe grew 0.5% and North America grew -3.0%. In emerging markets, India led with 23.4% growth, Middle East & Africa grew 16.0%, Latin America grew 13.2%, and Asia Pacific grew 3.9%.
The board of the IT behemoth has approved its third interim dividend of ₹9 and a special dividend of ₹18 per Equity Share of ₹1 each of the Company.
The company announced, the third interim dividend and the special dividend shall be paid on Monday, February 5, 2024, to the equity shareholders of the Company, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Friday, January 19, 2024, which is the Record Date fixed for the purpose.
The company has announced its second interim dividend of ₹9 per equity share of ₹1 each post financial results on October 11, 2023 and first interim dividend of ₹9 per equity share of ₹1 each in July 2023.
The IT major reported a 4% surge in its revenue to ₹60,583 crore. Meanwhile, revenue in constant currency witnessed an exponential rise by 1.7% for the quarter ended in December 2023.
Also read: Infosys Q3 Results Live Updates: Net profit at ₹6,106 crore, down 1.7% QoQ
The earnings before interest and taxes or EBIT margin was 25%, against 24.3% a quarter ago.
Tata Consultancy Services, on January 11, reported a 2% rise in its net profit for the quarter ended in December 2023, which is higher than the estimates, although the bottom line fell short of anticipated results.
“Our strong performance in a seasonally weak quarter buffeted by macro-economic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer centric strategy. We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth. We are seeing tremendous interest in Generative AI and are leading the innovation and exploratory efforts for our customers in this area."
Diverse and inclusive workplace: Women in the workforce: 35.7% | 153 Nationalities
Investing in the workforce: 39.7 million learning hours YTD | 3.7 million competencies YTD
LTM IT Services attrition rate at 13.3%
Revenue at `60,583 crore, +4.0% Y, +1.7% YoY in Constant Currency
Operating Margin at 25.0%*; an expansion of 0.5% YoY
Net Income at `11,735 crore*, +8.2%* YoY | Net Margin at 19.4%*
Net Cash from Operations at `11,276 crore i.e. 102% of Net Income
Dividend per share: ` 27.00, including ₹ 18.00 as special dividend | Record date 19/01/2024 | Payment date 05/02/2024
TCS reported a net profit of ₹11,432 crore in the September quarter, registering a growth of 8.7 per cent, compared to ₹10,431 crore in the corresponding period last year. Sequentially, the consolidated net profit was up 2.4 per cent as the IT major reported a profit of ₹11,074 crore in the perceding June quarter.
"We believe 2024 could be a confluence of multiple positive things for the IT sector. Our global equity strategists expect a soft landing of the US economy, a key market for Indian IT Services companies, backed by likely benign inflation and a resilient economy. We see the Fed’s indication of three rate cuts in 2024 and resilience in the US economy to spur enterprise confidence that could translate into stronger IT spending," said Kumar Rakesh, IT & Auto Analyst at BNP Paribas.
TCS share price today opened flat and touched an intraday low of ₹3,707 apiece on NSE. However, the IT stock witnessed buying interest at the lower level and bounced back touching an intraday high of ₹3,773 per share level. Here, profit booking was triggered and the stock retraced from Thursday's high. Currently, TCS share price is quoted at ₹3,724 per share on NSE.
“The Q3 results for the IT sector are anticipated to reflect a period of muted growth, largely due to global macroeconomic headwinds, and looming recession fears. But guidance is expected to be positive for the next quarter with North America and the UK showing promising pickup," said Sonam Srivastava, Founder and Fund Manager at Wright Research.
"TCS may report strong business outlook despite muted Q3 numbers. This is because the market is expecting improvement in the recently ended Q3Fy24. In this period, TCS employes lesser number of employees in comparison to the employees' rate of attrition. The Indian IT company is expected to mainain its average $10 billion deal wins in October to December 2023 quarter that had touched around $7 billion level in post-COVID scenario," said Saurabh Jain, Vice President — Research at SMC Global Securities.
"Market is expecting TCS to improve margins during the third quarter of the current financial year because in this period, the IT ginat has manged to pare its attrition via Air Intelligence. So, the company had to hire lesser number of employees against those who left the company," said Saurabh Jain, Vice President — Research at SMC Global Securities.
TCS Q3 Results Live: Average deal wins to remain at $10 billion
"TCS is getting bigger sized deals these days, which helped the IT giant to reach around $10 billion level in recent quarters and this rate of deal wins is expected to remain maintained during Q3FY24," said Saurabh Jain, Vice President — Research at SMC Global Securities.
"Despite muted expected numbers, TCS may improve its margins during the October to December 2023 quarter as the market is expecting a decrease in employees' attrition rate and lack of wage hike in the recently ended quarter," said Avinash Gorakshkar, Head of Research at Profitmart Securities.
"TCS share price has strong base at ₹3,650 apiece levels. TCS shareholders are advised to hold the IT stock maintaining stoploss at ₹3,650 apiece levels. Any dip ahead of Q3 results today can be a good opportunity to buy as the stock may go up to ₹3,800 and ₹3,850 apiece level, provided the current support remains sacrosanct," said Sumeet Bagadia, Executive Director at Choice Broking.
Ahead of the announcement of Q3 results 2024 today, TCS share price today opened flat at ₹3,724 apiece on NSE and went on to hit an intraday high of ₹3,732 per share. However, profit-booking soon triggered and the stock touched 3,707 per share level within few minutes of stock market's opening bell.
TCS board has informed Indian exchanges that its meeting to approve standalone financial results for the third quarter of the current financial year and first nine-month of the current fiscal has been fixed on 11th January 2024. The Q3 results will be declared after 3:30 PM whereas the guidance call is expected to take place at 7:30 PM
While approving Q3 results today, the board of directors of TCS is going to consider and approve third interim dividend for the financial year 2023-24. The company board has already fixed 19th January 2024 as record date for finalising list of eligible shareholders for dividend payment
In one of its exchange filings on 29th December 2023, TCS informed Indian exchanges that the meeting of the Board of Directors of the Company is scheduled on 11/01/2024, inter alia, to consider and approve Pursuant to Regulation 29(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
TCS exchange filing said, "We hereby inform you that a meeting of the Board of Directors of Tata Consultancy Services Limited is scheduled to be held on Thursday, January 11, 2024, inter alia to: i. approve and take on record the audited standalone financial results of the Company under Indian Accounting Standards (Ind AS) for the quarter and nine-month period ending December 31, 2023; ii. approve and take on record the audited consolidated financial results of the Company and its subsidiaries under Ind AS for the quarter and nine-month period ending December 31, 2023; and iii. consider declaration of Third interim dividend to the equity shareholders."
"TCS has already reported a 3.2% YoY revenue growth and a 6.6% YoY profit growth in Q3, despite a slight decline in EBIT margins and a strong order book," said Sonam Srivastava, Founder and Fund Manager at Wright Research.
"We expect the deal win momentum to sustain, particularly driven by cost optimization initiatives. Further, we would be looking out for comments on the demand outlook in the US (BFSI sector), UK, and Europe, any signs of recovery in discretionary projects, and margin outlook," said Dhruv Mudaraddi, Research Analyst at StoxBox.
We expect TCS’ Q3FY24 revenue to be flat sequentially as growth was tepid due to ongoing weaknesses in discretionary spending and furloughs during the quarter. However, this downturn is expected to be partially mitigated by the positive impact of previously secured deals that are now ramping up. Margins, on the other hand, are anticipated to witness a slight expansion QoQ, driven by the easing of supply-side constraints, operating leverage, and currency exchange benefits," said Dhruv Mudaraddi, Research Analyst at StoxBox.
"Post-results, we anticipate TCS shares to trade sideways within the range of ₹3600 to ₹3750," said Amit Goel, Co-Founder & Chief Global Strategist at Pace 360.
"TCS is set to announce its Q3 results for FY24 on Thursday. Our projections suggest a 0.70% quarter-on-quarter (QoQ) rise in revenue, expected to reach ₹60,100 crore from the previous ₹59,692 crore. We anticipate a 2% increase in operating profit to ₹14,787 crore, up from ₹14,483 crore in the prior quarter. The bottom line could see a 2.14% QoQ increase in profit after tax, estimated at ₹11,624 crore compared to the previous ₹11,380 crore," said Amit Goel, Co-Founder and Chief Global Strategist at Pace 360.
Tata Consultancy Services (TCS), India’s largest IT services company, will declare its earnings for the fiscal third quarter ended December 2023 today, January 11. TCS Q3 results are expected to be muted with a tepid growth in revenue and profit after tax (PAT) on account of the prevailing weakness in discretionary spending in key markets in the West.
