TCS Q4 show trumps D-Street expectations: 5 takeaways from the earnings
Tata Consultancy Services (TCS) on Friday reported better than expected fourth quarter numbers in a muted macro environment with strong margins and healthy topline growth.
Profit after tax (PAT) for the March quarter rose 9% year-on-year (YoY) to Rs 12,434 crore, while revenue from operations increased 3.5% to Rs 61,237 crore.
The growth was driven by a strong rise in India revenue (up 37.9%), a revival in the UK business (up 6.2%), and the regional markets vertical (up 9.7%).
Here are key takeaways from TCS Q4 earnings
1) Bottomline beat, but topline falls marginally short
Ahead of the results, analysts were pricing in a 5-6% YoY profit growth during the fourth quarter. However, the Mumbai-headquartered company posted 9% profit growth in the bottomline, while the top line rose by just over 3%.
In constant currency terms, revenue growth stood at 2.2% in the reporting period.
2) Strong operating margins
The IT services company reported an operating margin expansion of 150 basis points to 26% during Q4, which was completely out of the blue.
«I think what has really transpired has been the margin performance. So, I think nobody on the Street was of the opinion that margins will be at 26 odd percent,» said Mayuresh Joshi of Marketsmith India.
3) Record deals
The company's order book for FY24 was at an all-time high of $42.7 billion and record $13.2 billion in the fourth quarter, led by the mega deal with Aviva and others in the emerging markets vertical.
Analysts said the deal with Aviva will continue to yield
