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<\/figure>\n\n\n\nResilient Q3FY24 numbers In A Seasonally Weak Quarter<\/strong><\/p>\n\n\n\n TCS revenues grew 4% YoY in rupee terms to Rs 60,583 crore in Q3FY24. In dollar terms, growth was 1.7% YoY with revenues coming in at $7,281 million. In constant currency (CC) terms, revenues grew 1.7% YoY in December Quarter 2023. <\/p>\n\n\n\n While revenue growth rates both in rupee and dollar terms have cooled down considerably, the global IT major delivered resilient Q3FY24 numbers amid macro uncertainty and seasonal furloughs.<\/p>\n\n\n\n During pandemic uncertainty, excess investments were made by enterprises all over the world to augment digital capabilities with respect to changing customer behaviour. But in the present scenario, tightness in client spend is witnessed amid macro uncertainty riddled with high inflation and fear of recession. According to the management, while high cautiousness has led to moderation in client spend, pent up demand is also created for the long term. <\/p>\n\n\n\n Optimistic on medium to long term growth prospects, K Krithivasan, Chief Executive Officer and Managing Director at TCS said \u201cThere is pent-up demand and we are optimistic that our customers will scale up once they gain the comfort that the macro risks are receding.\u201d He further added that the management expects customers to scale up their investments in the consumer business and risk transformation areas which include, point of sale, channels, future stores, insights & recommendations driven by AI, supply chain, forecasting, Hyper-personalization, travel retailing and transport control towers.<\/p>\n\n\n\n BFSI to recover in Q4FY24, consumer business looks promising<\/strong><\/p>\n\n\n\n TCS manages a large portfolio across banking, capital markets and insurance and products and platforms which contributes 30% of its total revenue mix. \u201cBecause of the varied nature of this vertical, if banking does well, sometimes capital markets remain weak\u201d, said N G Subramaniam, Chief Operating Officer and Executive Director at TCS. He further said that the insurance and products and platforms segment has been doing well over the past few quarters. TCS completed two large programs in the BFSI segment and seasonal furloughs also led to lower BFSI growth. According to the management, BFSI vertical will return to growth by Q4FY24 and Q1FY25.<\/p>\n\n\n\n The next big vertical, consumer business with 15% revenue mix reported flat YoY revenue growth in Q3FY24. Speaking on consumer business, Krithivasan said, \u201cWe’ve also been seeing our consumer business group (CBG) has been quite promising, and we started seeing some green shoots in consumer business, but we’ll be able to say for sure next quarter, but it looks quite promising.\u201d The company reported highest cc YoY revenue growth in regional markets and energy, resources and utilities in Q3FY24.<\/p>\n\n\n\n Stable TCV in Q3FY24, margins to improve further<\/strong><\/p>\n\n\n\n Total contract value (TCV) is a lead indicator of medium to long-term growth performance of an IT company. TCS reported TCV of $ 8.1 billion which indicates a resilient order book. <\/p>\n\n\n\n The TCV for BFSI business was $2.6 billion and $1.5 billion for the consumer business group. The TCV of deals signed in North America stood at $4.2 billion in Q3FY24. Close peer Infosys deal wins have halved QoQ to $ 3.2 billion in December Quarter 2023. <\/p>\n\n\n\n Speaking on resilient order book in Q3FY24, Krithivasan said, \u201cTCV in the prior quarter, had two mega deals and so it had the lumpiness. So, there will be some ups and downs. But overall, when we look at the pipeline, we are quite comfortable with the deals that we are getting in. We aren’t seeing a softness on that front at all. \u201c While the company is confident of its resilient revenue stream, margins are also expected to improve in the near future. Operating margins came in at 25% in Q3FY24, up 50 basis points (bps) YoY and 70 bps sequentially. With a 80 bps impact on account of seasonal furloughs and higher third-party expenses on operating margins, there was a 60 bps offset through efficiency improvement and 70 bps improvement from reduction in subcontractor expenses. Speaking on margins, Samir Seksaria, Chief Financial Officer at TCS said, \u201cWe remain committed to our guiding beacon, which is the 26% to 28%.\u201d<\/p>\n\n\n\n He further added that in addition to disciplined execution, improved utilization, operational excellence, the company is also banking on subcontractor cost optimization as a major lever for margin expansion. In addition to this moderation in attrition rate will also improve operating margins in the near future. TCS attrition rate has moderated to 13.3% in Q3FY24 from 21.3% a year ago.<\/p>\n","protected":false},"excerpt":{"rendered":" Tata Consultancy Services (TCS) stock price jumped 4% after the IT major reported better than expected December Quarter 2023 numbers. Amid uncertain macros and seasonally weak quarter, investors were relieved by strong deal wins, improved operating margin despite furloughs and strong India performance. Management commentary was also positive on recovery of its largest vertical, banking […]<\/p>\n","protected":false},"author":3,"featured_media":1092,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_mi_skip_tracking":false},"categories":[5],"tags":[10,63,61,73],"yoast_head":"\n![\"\"\/](\"https:\/\/lh7-us.googleusercontent.com\/tPVPuo0ck1l1Fc1gehCOA4mYSUFALirEOBA1Z20Y0D284IrOGzxjoRX7NTWofkBII2Hy-p1tf8RIzExXXxEWQQOXSHtFOKREwkburpe85ZJSHwjJOnorJqe5FbnOsvfzeATjouQFvVCoPsfZFQ9URkg\")
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