TCS Q3 Results Exceeds Projections: PAT Grows 8.2% YoY, Revenue Hits Rs 60,583 Cr

Tata Consultancy Services (TCS) has defied expectations with its Q3 FY24 financial results, revealing a financial performance that surpassed earlier projections. 

Analysts had predicted a modest 0.7 per cent quarter-on-quarter rise in consolidated revenue to Rs 60,118 crore, with a 1 per cent increase in profit to Rs 11,445 crore. However, TCS reported a YoY revenue growth of 4 per cent, reaching Rs 60,583 crore and an 8.2 per cent YoY surge in Profit After Tax (PAT), amounting to Rs 11,735 crore.

TCS reported Operating Margin of 25 per cent, which reflects an expansion of 0.5 per cent YoY, exceeding the expectations of analysts. Moreover, the Net Income margin came in at 19.4 per cent.

The Net Cash from Operations at Rs 11,276 crore, equivalent to 102 per cent of Net Income. TCS attrition rate came in at 13.3 per cent and dividend per share of Rs 27, including a special dividend of Rs 18.

Analysts were particularly focused on TCS's EBIT margins, which have fallen within the expected range of 23 per cent to 26.6 per cent. The company reported an Order Book of USD 8.1 billion with a Book to Bill ratio of 1.1.

“Our strong performance in a seasonally weak quarter buffeted by macro-economic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer centric strategy. We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth. We are seeing tremendous interest in Generative AI and are leading the innovation and exploratory efforts for our customers in this area,” K Krithivasan, Chief Executive Officer and Managing Director, TCS said in a statement.

Segment Growth

In Q3, growth in industries was driven by the Energy, Resources and Utilities vertical, registering an 11.8 per cent increase, while Manufacturing exhibited 7 per cent growth, and Life Sciences and Healthcare recorded a 3.1 per cent uptick. 

Conversely, the Consumer Business Group (CBG) saw a marginal decline of -0.3 per cent, BFSI contracted by -3.0 per cent, Communications & Media decreased by -4.9 per cent and Technology & Services experienced a -5.0 per cent downturn. 

Regional Markets demonstrated strong growth at 19.2 per cent. Among major markets, the United Kingdom led with 8.1 per cent growth, Continental Europe showed a modest increase of 0.5 per cent and North America experienced a -3.0 per cent decline. 

In emerging markets, India took the lead with 23.4 per cent growth, followed by the Middle East & Africa at 16.0 per cent, Latin America at 13.2 per cent and Asia Pacific at 3.9 per cent. 

In terms of services, clients continued to prioritise investments geared towards cost reduction, enhanced business agility and supply chain resiliency, said TCS.

Hiring and Attrition

On hiring in Q4, Milind Lakkad, Chief HR Officer at TCS, said “We made a significant investment and we made so much of hiring in the past years and we are continuing to. You know leveraging that investment today and driving business that way and (we are) not needing to hire more.”

However, Lakkad said that TCS will be looking to hire “reasonably high” numbers in FY25, but refrained from giving a number. 

“We are committed to hiring from college campuses and growing talent organically. We have commenced our campus hiring process for the next year and see tremendous excitement among freshers to join TCS,” he said. 

The company’s attrition rate has shown a positive trend in Q3 FY24, standing at 13.3 per cent, a figure deemed within TCS's "range of comfort."