Last Updated: April 13, 2023, 11:38 IST
TCS declared its Q4 monetary outcomes
TCS has come out with tender March quarter outcomes, as revenues and margin each failed to satisfy the Street expectations
TCS Share Price: Tata Consultancy Services (TCS) has come out with tender March quarter outcomes, as revenues and margin each failed to satisfy the Street expectations. Shares of India’s high IT exporter had been seen buying and selling decrease in Thursday’s opening offers. The script was buying and selling 1.28 per cent decrease at Rs 3,200.00 per share on the NSE.
The firm reported a revenue of Rs 10,846 crore within the December 2022 quarter.
Consolidated income from operations got here in at Rs 59,162 crore, up 16.9 per cent, from Rs 50,591 crore within the year-ago quarter. It stood at Rs 58,229 crore within the December quarter of FY23.
Analysts had estimated the Tata Group firm to report 2.1 per cent quarter-on-quarter (QoQ) progress in income, whereas internet revenue was projected to extend 6.2 per cent QoQ within the January-March quarter.
In fixed foreign money (cc) phrases, the income rose 10.7 per cent year-on-year (YoY), the corporate mentioned.
Nomura India mentioned TCS’ fixed foreign money (CC) income progress of 0.6 per cent was weaker than the consensus estimate of 0.9 per cent CC progress. EBIT margin at 24.5 per cent was additionally decrease than the Street estimate of 25 per cent. While the full contract worth (TCV) of $10 billion was in step with expectations, heightened macroeconomic volatility continues to delay the restoration in US throughout verticals, even because the outlook is enhancing in continental Europe.
“BFSI clients remain in cash preservation mode, especially after recent volatility in financial markets. Management noted that certain discretionary projects are being deferred or put on hold as clients prioritise those projects which have upfront cost savings. We expect dollar revenue growth of 6.6 per cent in FY24F (vs 8.6 per cent in FY23) and 6.3 per cent in FY25F,” Nomura India said.
JPMorgan has maintained “underweight” score on the inventory with the goal value of two,700 a share. TCS’s Q4 outcomes missed on account of sudden weak spot within the US and continued challenges in Europe, it mentioned. The outlook for TCS has been clouded by shopper warning driving cuts to discretionary tech spends.
While headline signings are healthy, delayed/deferred discretionary projects will delay billing. The uncertain macro and tech spends should drive a softer H1FY24, pulling down FY24 growth.
JPMorgan has cut its revenue estimate by a percent and margin by 20 basis poins (bps), driving 2 percent EPS cuts.
Foreign broking house Citi has kept “sell” rating with a target price of 3,000 a share. The brokerage said TCS’s Q4 results were weaker than expected and valuations are still high.
Firstly, TCS’s FY23 TTM TCV (total contract value) is flattish YoY compared to over 10 percent YoY growth in FY22, which is a forward-looking indicator.
Secondly, the headcount for FY23 is expected to be over 4 percent YoY versus 21 percent YoY growth in FY22. Finally, the management commentary has turned incrementally cautious, which is also a forward-looking indicator.
With regular wage hikes, margin estimates may need to be revised down, it said.
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