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Actual vs. expectations

Revenue beats our/consensus estimates, while margin was tad below our/consensus expectations

Likely stock reaction

Neutral to positive

Key positives – Revenue beat, broad based growth, deal intake at USD7.8bn (book-to-bill ~1.1x), Dividend of Rs75/sh (incl Rs67/sh special dividend);

Result Summary

TCS reported revenues of USD7.07bn, up 2.9%/8.4% QoQ/YoY (13.5% YoY CC and 2.2% QoQ CC), above our expectations of USD6.93bn.

 Adj. EBITM grew by ~50bps QoQ to 24.5%, tad below our expectations.

 Adj. Profits at Rs108.5 bn vs our estimate of Rs111.6 bn, due to lower other income.

TCV of deals signed during the quarter was at USD7.8bn (book-to-bill ~1.1x) vs USD8.1bn in Q2FY23.

The company has declared an interim dividend of Rs 8 per share and a special dividend of Rs67 per share.

Management commentary: “We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and UK. Improved productivity, currency support and abating supply side challenges helped expand our operating margin in Q3. This gives us greater confidence in our ability to steer our profitability towards our preferred range, while continuing to invest in building newer capabilities to support our growth and market share gains.”

Growth by Verticals (all in CC terms)

Financial Services: 11.1% YoY ( V/s 13.1% YoY in Sep’22)

Retail: 18.7% YoY ( V/s 22.9% YoY in Sep’22)

 Life Sciences and healthcare: 14.4% YoY (v/s 14.5% YoY in Sep’22)

Manufacturing: 12.5% YoY( V/s 14.5% YoY in Sep’22)

Communications & Media: 13.5% YoY( V/s 18.7% YoY in Sep’22)

 
Growth by Geographies (all in CC terms)

US: 15.4% YoY ( V/s 17.6% YoY in Sep’22)

UK: 15.4% YoY( V/s 14.8% YoY in Sep’22)

Continental Europe: 9.7% YoY( V/s 14.1% YoY in Sep’22)

India: 9.1% YoY( V/s 16.7% YoY in Sep’22)APAC: 9.5% YoY ( V/s 7.0% YoY in Sep’22)

Manpower details

Total Headcount: 613,974, down 2,197 QoQ

LTM Attrition: 21.3% V/s 21.5% in Sep’22 quarter and 19.7% in Jun’22 quarter.

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