Deal Wins (TCV)
$8.1B
+3.4% YoY
Order book closure for Q3, achieved without mega deals.
TCS
Information Technology
11 Jan 2024
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%.
Financial stats pending filing verification
2-Minute Summary
✦ AI-Generated from Full Transcript
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।
Key Numbers
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.
Management Guidance
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.
Management guidance growthIndia 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.
Management guidance growthMargin improvement momentum to continue
CFO stated that levers like productivity, utilization, and subcontractor costs offer further scope for improvement, though no specific target given.
Management guidance marginsFresher 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.
Management guidance otherKey Risks
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.
high · management_commentaryDisconnect 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.
medium · analyst_questionGenAI revenue impact uncertain
GenAI is still in early stages with only four production deployments. Management could not provide a timeline for meaningful revenue contribution.
medium · analyst_questionEmployee headcount decline may continue
Headcount declined by 5,600 in Q3. CHRO said further decline would not be surprising, which could signal lower utilization or demand.
low · data_observationNotable Quotes
Our revenues grew by 1.7% year-on-year and 1% quarter-on-quarter on a constant currency basis. Our rupee revenue grew by 4% to reach INR 63,583 crore.
Our continued focus on operational excellence helped us achieve an operating margin of 25%, which represents a sequential margin expansion of 75 basis points.
I think still we are not in a position to call whether this macro... From our perspective, situations has not, that hasn't changed much.
Frequently Asked Questions
What was TCS's revenue in Q3 FY24?
TCS reported revenue of ₹63,583 Cr in Q3 FY24, representing a +4% change compared to the same quarter last year.
What guidance did TCS management give for FY25?
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. 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. 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. 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.
What are the key risks for TCS in FY25?
Key risks include 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.; 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.; 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.; Employee headcount decline may continue — Headcount declined by 5,600 in Q3. CHRO said further decline would not be surprising, which could signal lower utilization or demand..
Did TCS meet its previous quarter's guidance?
Of 2 tracked promises, management 0 met, 0 close, 2 missed.
Where can I read the full TCS Q3 FY24 concall transcript?
The full earnings conference call transcript or source release is available on the linked source material. This page provides an AI-generated summary with filing verification status shown on the financial stats.