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regular-article-logo Friday, 24 May 2024

Tata Consultancy Services profits up 9 per cent in fourth quarter, beats analyst estimates

The country’s largest IT services firm posted a net profit of Rs 12,434 crore against Rs 11,392 crore in the corresponding quarter of the previous year. While analyst estimates had varied, its bottomline was above their forecast of Rs 11,400-12,300 crore

Our Special Correspondent Mumbai Published 13.04.24, 11:54 AM
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Representational image File picture

The net profit of Tata Consultancy Services (TCS) in the fourth quarter of the fiscal has beaten analyst estimates.

Record deal wins saw TCS reporting a 9.15 per cent rise in consolidated net profit on Friday.

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The country’s largest IT services firm posted a net profit of Rs 12,434 crore against Rs 11,392 crore in the corresponding quarter of the previous year. While analyst estimates had varied, its bottomline was above their forecast of Rs 11,400-12,300 crore.

Ahead of the numbers, brokerages had forecast a muted showing by Indian IT services firms because of the weak macroeconomic environment on account of elevated interest rates. This has resulted in lower discretionary spending and clients renegotiating their contracts or even postponing and cancelling them.

Markets, however, have forecast TCS to perform better than its other large-cap peers. The Tata group company did not disappoint on that front as deal wins represented by total contract value (TCV) came in at a record $13.2 billion for the quarter.

For the whole fiscal, it stood at an all-time high of $ 42.7 billion.

Higher operating margins were another encouraging element in TCS numbers — jumping 100 basis points on a sequential basis and 150 basis points from a year ago to 26 per cent during the quarter.

While the $1.83 billion deal with state-run telco BSNL was one of the factors behind beating the street, the management said disciplined execution and lower sub-contract costs also helped the company.

During the quarter, TCS saw its revenues coming at Rs 61,237 crore against Rs 59,162 crore in the year-ago period, a rise of nearly 3.51 per cent which was in line with estimates. In US dollar terms, it stood at $7.3 billion compared with $7.1 billion in the same quarter of the previous fiscal.

“We are very pleased to close Q4 and 2023-24 on a strong note with the highest ever order book and a 26 per cent operating margin, validating the robustness of our business model and execution excellence,” K. Krithivasan, CEO and MD of the company, said.

“In an environment of global macro uncertainty, we are staying close to our customers and helping them execute on their core priorities with TCS’ portfolio of offerings, innovation capabilities and thought leadership.’’

Responding to a question on whether there will be better growth in the current fiscal, Krithivasan said while it is difficult to say when the better times will return, 2024-25 will be a better year than 2023-24. Unlike rival Infosys, TCS does not give out revenue growth guidance for the year.

Revenues from BFSI which is a big vertical for the company were down 3.2 per cent during the quarter from a year ago.

In terms of geographies, North America witnessed revenue decline by 2.3 per cent, while Continental Europe saw a drop of 2 per cent. Revenue from the India business grew 38 per cent.

The number of employees was lower by 13,245 people during the quarter. The board has proposed a final dividend of Rs 28 per share.

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