TCS Q3 Results: Net profit rises 11%, revenue grows 19%
5 min read . Updated: 09 Jan 2023, 10:15 PM IST
Premium- TCS Q3 results latest updates: The IT stock closed over 3% higher ahead of its earnings announcement on Monday
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PremiumIndia's top IT company Tata Consultancy Services Ltd (TCS) has kickstarted the earnings season for the third quarter of the current fiscal (Q3 FY23) on Monday, by reporting a lower-than-expected profit at ₹10,846 crore. Analysts on an average expected a profit of ₹11,046 crore, according to Refinitiv data. Ahead of its Q3 results, TCS shares closed more than 3% higher at ₹3,310 apiece on the BSE.
09 Jan 2023, 08:14:20 PM IST
'Order wins reflect demand scenario': Rajesh Gopinathan
The order wins reflect demand scenario, said Rajesh Gopinathan, chief executive officer and managing director of TCS. "We are constructive on the U.S., cautious on Europe and positive on the U.K, but acknowledge it could be volatile. Our posture is positive," Gopinathan said.
09 Jan 2023, 07:06:13 PM IST
Market participants on TCS
Market participants are keenly watching TCS for signals on the demand outlook for the sector, which is staring at the possibility of a recession in the US and Europe from where it draws a bulk of its revenue.
09 Jan 2023, 06:44:30 PM IST
‘IT Services would not remain immune’
"We believe that IT Services would not remain immune to worsening global macros in terms of rising inflation, economic slowdown, currency headwinds and likely cut on spending. Revenue growth would taper down to high single digit to low double digit in FY24E, while QoQ decline in order book, net employee reduction, elevated attrition and lower pricing power ahead would lead to valuation multiple contraction close to its historical averages," said Mitul Shah - Head of Research at Reliance Securities
09 Jan 2023, 06:38:56 PM IST
Brokerage Emkay's first cut on TCS Q3
Actual vs. expectations: Revenue beats our/consensus estimates, while margin was tad below our/consensus expectations
Likely stock reaction: Neutral to positive
Key positives: Revenue beat, broad based growth, deal intake at $7.8 bn (book-to-bill ~1.1x), Dividend of ₹75/sh (incl ₹67/sh special dividend)
09 Jan 2023, 06:09:50 PM IST
‘125,000 TCSers at middle and senior levels who have been with the company for more than 10 years on average’
Milind Lakkad, Chief HR Officer, said: “Our focus over the last few quarters on bringing in fresh talent at scale, training them on new technologies and making them productive is paying off. We are particularly proud of having 125,000 TCSers at middle and senior levels who have been with the company for more than 10 years on average. They have been central to the successful cultural integration of all the fresh talent we have onboarded in the last couple of years, and their contextual knowledge and customer-centricity have been key to the high level of customer satisfaction that TCS is known for."
09 Jan 2023, 05:58:39 PM IST
Orderbook
The Mumbai-based company's order book for the third quarter stood at $7.8 billion, down from $8.1 billion in the September quarter
09 Jan 2023, 05:55:32 PM IST
TCS CFO on operating margin
Samir Seksaria, Chief Financial Officer, said: “Improved productivity, currency support and abating supplyside challenges helped expand our operating margin in Q3. This gives us greater confidence in our ability to steer our profitability towards our preferred range, while continuing to invest in building newer capabilities to support our growth and market share gains."
09 Jan 2023, 05:53:57 PM IST
TCS workforce and attrition
The company's overall workforce declined by 2,197 to 6,13,974 as on December 2022, the largest employer in the sector said, adding its attrition has dropped to 21.3% from 21.5%, after six quarters of uptick, and the quarterly annualised attrition has fallen nearly 6%
09 Jan 2023, 05:50:49 PM IST
TCS CEO on Q3 results
Rajesh Gopinathan, Chief Executive Officer and Managing Director, said: “We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and UK. The sustained strength of demand for our services is a validation of the value we provide to our clients in helping them differentiate themselves, while enhancing their competitiveness. Looking ahead, and beyond current uncertainties, our longer-term growth outlook remains robust."
09 Jan 2023, 05:44:30 PM IST
Key markets
Among major markets, North America and UK led with +15.4% growth; Continental Europe grew +9.7%. In emerging markets, Latin America grew +14.6%, India grew +9.1%, Asia Pacific grew +9.5% and Middle East & Africa grew +8.6%
09 Jan 2023, 05:43:43 PM IST
Broad-based growth
Growth was led by Retail and CPG (18.7%) and Life Sciences & Healthcare verticals (+14.4%)
Communications & Media grew +13.5% and Technology & Services grew +13.6%. Manufacturing grew +12.5% while BFSI grew +11.1%
09 Jan 2023, 05:35:36 PM IST
TCS Q3 margin
Operating Margin during October-December 2022 quarter came at 24.5%; contraction of 0.5% YoY, however has expanded from 24% in the previous quarter of September 2022
Net Margin at 18.6%
09 Jan 2023, 05:27:41 PM IST
Interim and special dividend declared
TCS' board has announced third interim dividend of ₹75 per share including special dividend of ₹67 per share
09 Jan 2023, 05:25:52 PM IST
TCS revenue
The IT major said that its revenue came at ₹58,229 crore, up 19% year-on-year (YoY), +13.5% YoY in constant currency (cc)
Dollar revenue came at $7,075 million as compared to $6,877 million quarter-on-quarter (QoQ)
09 Jan 2023, 05:21:55 PM IST
TCS Q3 results announced
TCS' net profit for the third quarter rose by nearly 11% to ₹10,846 crore as compared to ₹9,806 crore in the year-ago quarter.
The profit is up by 4% from ₹10,431 crore in the previous quarter (QoQ)
09 Jan 2023, 05:00:18 PM IST
TCS stock performance
The IT stock had hit a 52-week high on January 18, 2022 at ₹4,045.50 per share and a 52-week low on September 26, 2022 at ₹2,926. TCS shares have declined about 14% in a year's period
09 Jan 2023, 04:45:03 PM IST
IT sector preview
The Indian IT services sector is expected to report moderate growth in Q3 FY23, primarily on account of the seasonally weak quarter and a slowdown in growth momentum led by uncertainties in the US and UK
09 Jan 2023, 04:30:28 PM IST
Margin expectations
Its Operating Margins are likely to remain flat owing to moderation in supply-side constraints.
BNP Paribas models a 33 bps q-q EBIT margin expansion to 24.3% as supply-side challenges ease and utilisation and productivity levers kick in
09 Jan 2023, 04:20:34 PM IST
TCS' revenue estimates
Analysts at BNP Paribas expect TCS' dollar revenue growth of 1.4% q-q (+1.5% q-q in CC) due to the impact of usual seasonality.
Another brokerage Axis Securities expects TCS to report revenue growth of 3.6% on a sequential basis (QoQ)
09 Jan 2023, 04:09:30 PM IST
Things to watch out for
Key things to watch out for: Outlook on growth/margins, medium-term industry demand trends and impact of macro headwinds on demand; commentary on US and Europe markets; deal wins; deal pipeline; margin guidance
09 Jan 2023, 04:00:37 PM IST
TCS Q3 expectations
Analysts expect moderate growth, aided by ramp up on large deal wins in the previous quarters, but margins could remain flat due to moderation in supply side constraints
09 Jan 2023, 03:50:29 PM IST
TCS shares close higher ahead of Q3 results
Ahead of its Q3 results announcement, shares of TCS closed more than 3% higher at ₹3,319 apiece on the BSE on Monday
09 Jan 2023, 03:44:58 PM IST
TCS may declare third interim dividend
TCS' board will also be considering the declaration of third interim dividend to the equity shareholders in its board meet today.
The IT major said that, if declared, the interim dividend shall be paid 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 Tuesday, January 17, 2023 which is the Record Date fixed for this purpose
09 Jan 2023, 03:40:21 PM IST
TCS Q3 results
TCS will announce its results for the third quarter of FY 2023, ended December 30, on January 9, 2023, after-market trading hours
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