TCS Q3 Results: Revenue Up 1.5%, Net Profit Meets Estimates Despite Headwinds

Tata Consultancy Services Ltd.'s revenue rose meeting estimates, even as macro headwinds and furloughs weighed in a seasonally weak quarter.

Revenue of the Mumbai-based IT major rose 1.49% over the previous three months to Rs 60,583 crore in the quarter ended Dec. 31, according to an exchange filing on Thursday. That compares with the Rs 58,229 crore consensus estimate of analysts tracked by Bloomberg.

TCS Q3 Results: Key Highlights (QoQ)

• Revenue up 1.49% at Rs 60,583 crore (Estimate: Rs 60,109 crore).

• EBIT up 4.6% at Rs 15,155 crore (Estimate: Rs 14,787 crore).

• EBIT margin at 25.01% (Estimate: 25.39%).

• Net profit down 2.5% at Rs 11,097 crore (Estimate: Rs 11,498 crore).

The company has made a $115-million (Rs 958 crore) provision in its third-quarter earnings related to a case involving Epic Systems Corp., after the U.S. Supreme Court rejected the company’s petition to appeal an earlier court verdict. The provision has been made as an exceptional item.

The order book stands at $8.1 billion and a book-to-bill ratio of 1.1.

“Our strong performance in a seasonally weak quarter buffeted by macroeconomic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer-centric strategy," said Chief Executive Officer and Managing Director K Krithivasan.

TCS has announced a third interim dividend of Rs 9 and a special dividend of Rs 18 per equity share for FY24. The record date for the dividend is on Jan. 19. The third interim dividend and the special dividend shall be paid on Feb. 5.

TCS has reported double-digit growth in emerging markets, led by India (23.4%), Middle East and Africa (16.0%), Latin America (13.2%), and Asia Pacific (3.9%).

Among major markets, the U.K. led with 8.1% growth, continental Europe grew 0.5%, while North America saw a decline of 3%.

The growth has been led by energy, resources and utilities (1.8%), manufacturing (7.0%), and life sciences and healthcare (3.1%). Consumer Business Group, BFSI, communications and media grew, while technology and services reported negative growth.

AI Cloud led the demand among service lines, with strong momentum sustaining for cloud migration and increasing interest among customers for AI and Generative AI, TCS said.

As of Dec. 31, the company has applied for 7,852 patents, including 187 applied during the quarter; and has been granted 3,458 patents, including 305 granted in Q3.

On Thursday, TCS shares rose 0.61% to Rs 3,736.20 apiece on the BSE, even as the benchmark Sensex ended the day 0.09% higher. The quarterly results were declared after market hours.

(Corrects an earlier version that misstated revenue growth.)