TCS Q3 results: Profit up 2%, Rs 27 per share dividend announced; deal wins, management commentary, key takeaways

The K Krithivasan-led Tata Consultancy Services Ltd (TCS) on Thursday reported a 1.96 per cent year-on-year (YoY) rise in consolidated net profit at Rs 11,097 crore for the December quarter compared with Rs 10,883 crore in the same quarter last year, hurt by Rs 958 crore or $125 million one-time charge towards settlement of legal claim. The profit growth lower than analyst projections of 7-11 per cent growth.

Excluding settlement of legal claims, the profit for the quarter came in at Rs 11,774 crore, TCS said in a BSE filing.

The Mumbai-based Tata group firm said its consolidated revenue for the quarter rose 4.04 per cent YoY to Rs 60,583 crore from Rs 58,229 crore in the same quarter last year. Analysts were expecting a flattish revenue growth in rupee terms. Revenue in constant currency term rose 1.7 per cent YoY. Operating margin for the quarter stood at 25 per cent, up 50 basis points YoY. Net Margin came in at 19.4 per cent. Attrition rate for IT Services stood at 13.3 per cent, TCS said.

TCS interim dividend@27 per share

The IT major announced a third interim dividend of Rs 9 per share and a special dividend of Rs 18 per share. The third interim dividend and the special dividend would be paid on Monday, February 5, 2024, to the equity shareholders of the company.

The record date for the same January 19, 2024, Friday. TCS shareholders, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on this date will be eligible for dividend.

Management commentary

K Krithivasan, Chief Executive Officer and Managing Director, said: “Our strong performance in a seasonally weak quarter buffeted by macro-economic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer centric strategy. We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth. We are seeing tremendous interest in Generative AI and are leading the innovation and exploratory efforts for our customers in this area.”

Chief Operating Officer and Executive Director, N Ganapathy Subramaniam, said: “The quarter saw us make significant progress in many projects of national importance, demonstrating our execution strength. Our products and platforms had a strong quarter with new wins and go-lives. The MCX platform is scaling well and processing record transaction volumes. We are on course with the BSNL 4G/5G network roll out. We are making good progress in upskilling our employees in Generative AI through our AI playground platform.”

Chief Financial Officer, Samir Seksaria, said: “Our disciplined execution and operational rigor drove strong improvement in our industry leading margins despite seasonal headwinds. We are making the right investments in our people, innovation and infrastructure to differentiate ourselves and create long term value for all our stakeholders.” Milind Lakkad, Chief HR Officer, said: “The vibrancy and energy levels in our offices are increasing as more and more of our employees are back in the offices. We expect to be back to our normal operating mode by the end of the current fiscal year. Parallelly, attrition is trending down and at 13.3%, is now in our range of comfort. We are committed to hiring from college campuses and growing talent organically. We have commenced our campus hiring process for the next year and see tremendous excitement among freshers to join TCS.”

TCS Q3 results highlights

TCS said its growth was led by the Energy, Resources and Utilities vertical which grew 11.8 per cent. The Manufacturing vertical grew 7.0 per cent, Life Sciences and Healthcare 3.1 per cent.

The Consumer Business Group (CBG) degrew 0.3 per cent and BFSI 3.0 per cent. Communications & Media vertical degrew 4.9 per cent and Technology & Services 5 per cent.

Regional markets grew 19.2 per cent. Among major markets, the United Kingdom led with 8.1 per cent growth; Continental Europe grew 0.5 per cent and North America degrew 3 per cent.

"In emerging markets, India led with 23.4% growth, Middle East & Africa grew 16.0%, Latin America grew 13.2%, and Asia Pacific grew 3.9%. Services: Clients continue to prioritize investments that accelerate cost reduction, drive business agility and improve resiliency across the supply chain. TCS is helping clients realize business benefits with its significant investments in talent development, proprietary solutions and expanding alliances and partnerships. AI.Cloud, Cyber Security and Cognitive Business Operations led the growth amongst service lines, from AWS," TCS said.

Also read: TCS Q3 results, dividend today: Profit may rise 7-11%; margin may expand sequentially

Earlier today, TCS shares closed at Rs 3,726.70 on BSE, up 0.37 per cent. The IT stock is up 14.32 per cent in the last six months and 11.77 per cent in the last one year.

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