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View Bear Cases →Tata Consultancy Services Ltd — Q3 FY24
TCS reported Q3 FY24 revenue of INR 63,583 crore, up 4% YoY, with operating margin expanding 70 bps sequentially to 25%.
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TCS reported Q3 FY24 revenue of INR 63,583 crore, up 4% YoY, with operating margin expanding 70 bps sequentially to 25%. Net profit stood at INR 11,735 crore, with net margin at 19.4%. Growth was driven by cloud and cybersecurity, with strong performance in India (+23.4% YoY) and UK (+8.1% YoY), while North America declined 3% due to macro uncertainties. Deal wins totaled $8.1 billion, broad-based without mega deals. Management noted no change in discretionary spending, with clients prioritizing cost optimization. GenAI is moving from POC to production with four deployments, but revenue impact remains small. Attrition improved to 13.3%. Guidance remains cautious; no specific revenue or margin targets given. Risk: prolonged weakness in North America and BFSI could delay recovery.
टीसीएस ने तीसरी तिमाही में 63,583 करोड़ रुपये की कमाई की, जो पिछले साल से 4% ज्यादा है। मुनाफा 11,735 करोड़ रुपये रहा। कंपनी की कमाई का 25% हिस्सा खर्चों के बाद बचता है, जिसे ऑपरेटिंग मार्जिन कहते हैं। क्लाउड और साइबर सुरक्षा से सबसे ज्यादा कमाई बढ़ी। भारत में 23.4% और ब्रिटेन में 8.1% की बढ़ोतरी हुई, लेकिन अमेरिका में अनिश्चितता के कारण 3% गिरावट आई। कंपनी को 8.1 अरब डॉलर के नए ऑर्डर मिले। कर्मचारियों के छोड़ने की दर घटकर 13.3% रह गई। एआई से कमाई अभी बहुत कम है। कंपनी ने आगे कोई ठोस अनुमान नहीं दिया। अमेरिका और बैंकिंग क्षेत्र में कमजोरी से रिकवरी में देरी हो सकती है।
Bear Cases5 alive · 0 deadPromises0 met · 2 missedRisks4 trackedTranscriptfull text
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Promises
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0 delivered, 0 close, 2 missed.
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Risks
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Risk Intelligence
Prolonged weakness in North America and BFSI
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Transcript
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Read Transcript →Quarter Snapshot
Deal Wins (TCV)
$8.1B
+3.4% YoY
Order book closure for Q3, achieved without mega deals.
Attrition (LTM IT)
13.3%
-160bps QoQ
Attrition reduced from 14.9% in Q2, now in comfort range.
India Revenue Growth
23.4%
+23.4% YoY
Driven by BSNL deal and positive seasonality.
North America Revenue Growth
-3%
-3% YoY
Reflects market uncertainties; management expects recovery.
What Changed vs Last Quarter
NEW
BFSI growth expected from Q4
Management expects BFSI to bottom out and grow from the coming quarter, driven by deal wins and seasonal bounce-back.
NEW
India growth momentum to continue over 4-6 quarters
BSNL deal will contribute over the next 4-6 quarters, with momentum picking up quarter on quarter.
NEW
Margin improvement momentum to continue
CFO stated that levers like productivity, utilization, and subcontractor costs offer further scope for improvement, though no specific target given.
NEW
Fresher hiring of 40,000 for FY24 still on track
CHRO reaffirmed the plan to onboard 40,000 freshers in FY24, with hiring progressing as per schedule.
DROPPED
Margin guidance maintained at 26%-28%
Management reiterated the long-term operating margin range of 26%-28%, with no specific timeline for achievement.
DROPPED
Deal win run-rate raised to $9-10B per quarter
COO NGS indicated the new normal for quarterly deal wins is around $9-10 billion, up from the earlier $7-9 billion range.
DROPPED
BSNL 4G/5G rollout target in 12-18 months
Management expects to complete the BSNL network rollout within 12 to 18 months from Q2 FY24.
DROPPED
Fresher hiring to continue; all offers honored
TCS will continue campus hiring and honor all offers, though onboarding may be delayed by a quarter.
NEW RISK
Prolonged weakness in North America and BFSI
North America revenue declined 3% YoY and BFSI degrew 3% YoY. Management could not provide a timeline for recovery, citing macro uncertainties.
NEW RISK
Disconnect between TCV and revenue growth
Analyst noted that despite strong deal wins, revenue growth has been muted, partly due to reprioritization of older programs. Management confirmed this trend.
NEW RISK
GenAI revenue impact uncertain
GenAI is still in early stages with only four production deployments. Management could not provide a timeline for meaningful revenue contribution.
RISK GONE
Macro uncertainty delaying revenue conversion
Clients are optimizing existing projects and deferring discretionary spending, causing revenue growth to lag behind strong deal wins.
RISK GONE
Large deal margins may be initially dilutive
CFO acknowledged that large deals like JLR and BSNL may have lower margins in early phases, though portfolio-level margins are managed.
RISK GONE
Geopolitical risk from Israel conflict
TCS has 250+ employees in Israel; while business continuity plans are in place, escalation could disrupt operations.
Fast read
Guidance and risk preview
Management expects BFSI to bottom out and grow from the coming quarter, driven by deal wins and seasonal bounce-back.
North America revenue declined 3% YoY and BFSI degrew 3% YoY.
View Risks →