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Revenue growth remains muted despite strong deal wins Alive 3, weakening 1, dead 0.
View Bear Cases →Tata Consultancy Services Ltd — Q4 FY24
TCS reported Q4 FY24 revenue of INR 61,237 crore, up 3.5% YoY in rupee terms, with operating margin expanding 100 bps sequentially to 26%, the highest in 12 quarters.
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TCS reported Q4 FY24 revenue of INR 61,237 crore, up 3.5% YoY in rupee terms, with operating margin expanding 100 bps sequentially to 26%, the highest in 12 quarters. Full-year revenue grew 6.8% in rupee terms, with operating margin at 24.6%. Record quarterly TCV of $13.2 billion and full-year TCV of $42.7 billion (up 25.2% YoY) underscore strong deal momentum, though management remains cautious on near-term discretionary spending. BFSI declined 3.2% YoY but insurance grew; manufacturing and regional markets led growth. Attrition fell to 12.5%. Guidance for FY25 is cautiously optimistic, with management expecting better growth than FY24 but citing headwinds from client caution and discretionary spend pressure. Key risks include continued volatility in client decision-making and potential margin headwinds from wage hikes in Q1.
टीसीएस ने चौथी तिमाही में 61,237 करोड़ रुपये की कमाई की, जो पिछले साल से 3.5% ज्यादा है। कंपनी का मुनाफा बढ़कर 26% हो गया, जो पिछले 12 तिमाहियों में सबसे ज्यादा है। पूरे साल कमाई 6.8% बढ़ी और मुनाफा 24.6% रहा। नए सौदों का रिकॉर्ड मूल्य 13.2 अरब डॉलर रहा, जो पिछले साल से 25% ज्यादा है। बैंकिंग क्षेत्र में 3.2% गिरावट आई, लेकिन बीमा और मैन्युफैक्चरिंग में बढ़त रही। कर्मचारियों के छोड़ने की दर घटकर 12.5% रह गई। अगले साल के लिए कंपनी सावधानी से उम्मीद कर रही है, क्योंकि ग्राहक अभी भी खर्च में सावधानी बरत रहे हैं। वेतन बढ़ोतरी से मुनाफे पर दबाव पड़ सकता है।
Bear Cases3 alive · 0 deadPromises0 met · 2 missedRisks4 trackedTranscriptfull text
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Focused Modules
Promises
3 promises
Promise Tracker
0 delivered, 0 close, 2 missed, 1 delayed.
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Risks
4 risks
Risk Intelligence
Client discretionary spend volatility
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Transcript
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Read Transcript →Quarter Snapshot
TCV (Total Contract Value) Q4
$13.2B
+25.2% YoY (FY24 TCV)
Record quarterly TCV driven by strong deal wins across markets, including one mega deal.
Attrition (LTM IT Services)
12.5%
-80bps QoQ
Attrition continued to decline sequentially, now within the company's comfort range of 11%-13%.
BFSI TCV Q4
$4.1B
N/A
BFSI vertical contributed significantly to TCV, though revenue declined 3.2% YoY.
Client Additions ($100M+ band)
62 clients
+2 YoY
TCS added 2 clients in the $100 million+ revenue band, reflecting deepening relationships.
What Changed vs Last Quarter
NEW
FY25 growth expected to be better than FY24
Management stated that based on strong TCV, FY25 should be better than FY24, but did not provide specific numbers.
NEW
Operating margin trajectory similar to FY24
CFO indicated Q1 will see headwinds from wage hikes, with margins clawing back through the year, similar to FY24 pattern.
NEW
Pricing improvements to drive incremental margins
CFO noted that incremental margins will need to come from pricing improvements, including renewals and new deals at higher prices.
DROPPED
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.
DROPPED
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.
DROPPED
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.
DROPPED
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.
NEW RISK
Client discretionary spend volatility
Management highlighted that clients continue to pause or defer discretionary projects with unclear ROI, creating headwinds to near-term revenue.
NEW RISK
Margin headwinds from wage hikes in Q1
Annual wage increments effective April 1 will pressure margins in Q1 FY25, though management expects recovery through the year.
NEW RISK
Unpredictable client decision-making on deal ramp-downs
NGS noted that clients sometimes defer or slow down signed deals, creating volatility that is hard to predict, as seen in BFSI.
NEW RISK
Subcontractor cost lever may have bottomed out
CFO indicated that the subcontractor cost optimization that helped margins in FY24 may have limited further scope, reducing a key margin lever.
RISK GONE
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.
RISK GONE
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.
RISK GONE
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
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.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q3 FY24
CHRO reaffirmed the plan to onboard 40,000 freshers in FY24, with hiring progressing as per schedule.
Mentioned in Q2 FY24, Q3 FY24
Headcount declined by 5,600 in Q3. CHRO said further decline would not be surprising, which could signal lower utilization or demand.
Mentioned in Q1 FY24, Q3 FY24
North America revenue declined 3% YoY and BFSI degrew 3% YoY. Management could not provide a timeline for recovery, citing macro uncertainties.
Fast read
Guidance and risk preview
Management stated that based on strong TCV, FY25 should be better than FY24, but did not provide specific numbers.
Management highlighted that clients continue to pause or defer discretionary projects with unclear ROI, creating headwinds to near-term revenue.
View Risks →