News

Published: Jan 9, 2023
Updated: Jan 9, 2023

TCS Releases Q3 Results – Misses Market Estimates; Profit and Revenue See Modest Growth

Results miss market estimates

Tata Consultancy Services (TCS), a leading Indian information technology company, has released its Q3 results for the fiscal year. The results showed a 4% quarter-on-quarter (QoQ) increase in profit to 108.5 billion rupees (Rs) ($1.47 billion) and a 5.3% QoQ rise in revenue to Rs 582 billion. However, the company's diluted EPS rose from Rs 28.51 in Q2 to Rs 29.64 in Q3, missing market expectations.

Special and Interim Dividend Announced

In positive news, TCS announced a special and interim dividend of Rs 67 and Rs 8 per share, respectively. TCS CEO Rajesh Gopinathan stated that the company's margin for the quarter was aided by a currency tailwind of 70 basis points and 30 basis points of operational efficiency, resulting in an EBIT margin of 24.53%. However, these gains were offset by higher third-party costs.

Attrition Rate Decreases Slightly

Given that during past few quarters , the major problem in the IT sector was the attrition factor faced by major IT giants due to tough competition to offer higher salary packages increasing employee costs and retaining quality talent, this quarter too saw a high attrition rate , but showed some signs of improving.

Q3 attrition at TCS was recorded at 21.3%, a slight decrease from the previous quarter's rate of 21.5%.

Orderbook at Four-Quarter Low

The company's orderbook for the quarter was $7.8 billion, the lowest it has been in four quarters. Gopinathan commented that the demand scenario for the company has not changed significantly.

Shares End 3% Higher Despite Results Being Released After Market Hours

Shares of TCS ended 3% higher at Rs 3,309 ahead of the earnings announcement, despite the results being released after market hours. The stock was among the top performers on the Nifty 50 index.

Despite Missing Market Expectations, TCS Sets Precedent for Resilient IT Sector in Q3

Overall, TCS saw modest growth in profit and revenue in Q3, but the results fell short of market expectations. The company's strong dividend announcement and slight decrease in attrition rate may provide some comfort to investors.The IT sector as a whole remains resilient, with TCS setting a precedent for the industry.