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Yes Securities Report
Tata Consultancy Services Ltd. reported operating performance that was slightly below estimates. It reported U.S. dollar revenue growth of 1.7% QoQ, which had around 100 basis points of cross currency tailwind in the quarter; while Indian rupee reported growth was 1.6% QoQ.
The revenue growth was led by strong performance in retail and consumer packaged goods vertical(up 22.9% YoY).
Ebit margin was flat QoQ at 24.5% as potential margin tailwind on account of falling attrition and improving pyramid got offset by higher onsite cost. Last twelve months attrition was down 120 bps QoQ to 20.1%.
The long term demand story remains intact led by cloud adoption and data analytics across enterprises. However, clients remain cautious and are taking longer time for decision making and are slowing down discretionary IT projects and this would result in lower revenue growth in FY24.
The operating margin is expected to improve in FY24 by 50- 70 basis points YoY led by improving employee pyramid and falling employee attrition.
We estimate revenue compound annual growth rate of 11.0% over FY23‐25E with average Ebit margin of 25.2%.
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Also Read: TCS Q4 Results Review - Strong Deal Flow To Recompense For Discretionary Slowdown: Motilal Oswal
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