Updated January 12th, 2024 at 12:12 IST
What worked, and did not work for TCS in Q3FY24?
India topped growth in emerging markets but North America showed regrowth in major markets segment
Tata Consultancy Services saw a sequential dip of 2.50 per cent to Rs 11,058 crore, from 11,342 crore in the previous quarter of the same fiscal (Q2FY24) in what is deemed to be a sequentially weak quarter, triggered more by headwinds due to macroeconomic conditions.
The IT major’s revenue soared 1.5 per cent to Rs 60,583 crore, from Rs 59,692 crore in Q2FY24.
The Mumbai-based salt-to-services arm of the Tata Group saw massive growth in the home market, but saw a 3 per cent degrowth in the US market.
Revenue for the reporting quarter grew 4 per cent to Rs 60,583 crore on the back of double-digit growth in emerging markets, and a massive project from the state-run telco BSNL, the management said during a press conference.
TCS’ top management is helmed by chief executive officer K Krithivasan, who said the net income was impacted by a USD 125 million out of the USD 140 million charge it had taken for a legal settlement in the US during the quarter.
The operating margin improved by 50 bps to 25 per cent, led 70 per cent by improved productivity and another 25 per cent on the back of forex gains, TCS said.
Net margin for the company stood at 19.4 per cent, their chief financial officer Samir Seksaria said.
The company also declared a payout of Rs 27 a share including an Rs 18/share special dividend, with record date on January 19. Notably, the company had announced a Rs 17,000-crore buyback last month.
The order book stood was at $8.1 billion, with net cash from operations at Rs 11,276 crore.
The chief operating officer and executive director N Ganapathy Subramaniam said the order book flow will be maintained into the next quarters, on the back of an efficient sales team.
In terms of industry segments, growth was led by the energy, resources and utilities verticals which grew at 11.8 per cent, while manufacturing grew 7 per cent, and life sciences and healthcare grew 3.1 per cent.
England had the most growth by 8.1 per cent in terms of major markets, with Continental Europe growing marginally by 0.5 per cent. North America saw a 3 per cent growth deceleration.
Among emerging markets, India registered 23.4 per cent growth followed by the Middle East and Africa at 16 per cent. While Latin America grew 13.2 per cent, Asia Pacific grew 3.9 per cent.
The management predicted the muted momentum to continue, saying is too early to call the muted sentiment in the US “because we have not yet seen any change in the sentiment on the ground level." CEO Krithivasan refused to predict when they will see a change.
For the wins, Krithivasan credited sustained cloud demand and operational excellence, strong double-digit growth in emerging markets amid the traditionally weak quarter.
Subramaniam said India market growth was led by the rollout of BSNL’s 4G/5G network as well as the MCX platform deal.
Attrition levels for the company were at 13.3 per cent, according to company CHRO Milind Lakkad.
TCS has been the first to enter the campuses this year, he said, but did not give a number for hiring.
He described the 10,669 net fall in the bench-strength to 6,03,305 from 153 nationalities in the quarter-end as comfortable and expressed the hope that it stabilizes at that level. As much as 35.7 per cent of the total workforce are women.
On the generative AI training, he said with the joint effort with Nvidia, the company has already trained 14,000 personnel on GenAI so far and another 17,000 are on course for the next batch of training.
Of the total 6-lakh-plus headcount the company has already internally trained as much as 1.68 lakh on this new disruptive technology so far.
TCS stocks traded 3.63 per cent on the exchanges today.
(With agency inputs)
Published January 12th, 2024 at 10:32 IST