Tata Consultancy Services (TCS) declared the financial results for the fourth quarter of fiscal year 2022-23 on April 12. Here are the key highlights.
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Buzz around ChatGPT among clients...focusing on generative AI: NG Subramaiam
"In my interactions with clients over the last quarter, the conversation starts and stops with 'ChatGPT'," said TCS COO NGSubramaniam. He added that the company will focus on "generative AI". Over the last 3-4 decades, "we have collected enormous data that we can cut, slice and dice and use how we want to"," he added, further stating that"we are using ML to see how we can raise the bar".
Sentiments were down in BFSI, says CEO-designate K Krithivasan
"People rushed to save costs. More sentiments at play than anything structural. Large bank clients are benefiting from increasing deposits in North America,"saidincoming TCS CEOKKrithivasan.
Q4 weaker than expected, primarily because of North America: Rajesh Gopinathan
"This quarter has come in weaker than what was expected," Rajesh Gopinathan said, as he cited the financial volatility in the banking system of North America. "Difficult to call how long this will last out," he added.
FY23 year of transition, we navigated well: TCS CFO Samir Seksaria
"FY23 was a year of transition, as supply-side challenges abated while pandemic-depressed travel and discretionary spends normalized. We navigated this change well, without slowing down our investments in our people, research and innovation and intellectual property. Our longer term competitiveness remains intact, giving us industry-leading profitability even as we pursue our growth aspirations," TCS Chief Financial Officer Samir Seksaria said.
Incoming TCS CEO K Krithivasan to take over on June 1, 2023
Incoming Tata Consultancy Services Chief Executive Officer K Krithivasan will take over the post on June 1, with outgoing CEO Rajesh Gopinathan staying on till September 15 to help with the transition.
"…we wish to inform that the Board of Directors of the Company have, at its meeting held today, appointed Mr. K. Krithivasan as the Chief Executive Officer and Managing Director of the Company to take over from Mr. Rajesh Gopinathan with effect from June 1, 2023, subject to approval of the shareholders," TCS said in a filing with the exchanges.
Embracing AI holistically in our execution methods: TCS COO N Ganapathy Subramaniam
“During Q4 and through the year, we successfully delivered transformation programs of varying size and scale. Cloud and Data continue to generate huge demand both internally from a talent perspective and externally from a solutions point of view. We are embracing AI/ML holistically in our execution methods to leverage the huge data and metrics that we have on our delivery performance over decades, to generate insights and raise the bar on quality and experience to our clients,"NGanapathySubramaniam, TCS Chief Operating Officer and Executive Director, said.
TCS CEO Rajeh Gopinathan's view on FY23 results
"It is very satisfying to look back at our strong growth in FY 2023, on top of the mid-teen growth in the prior year. The strength of our order book demonstrates the resilience of demand for our services and gives us visibility for growth in the medium term. Krithi and I are working closely to ensure that the leadership transition over the next few months is smooth and seamless to all our stakeholders, and that TCS is well positioned to capture the opportunities ahead," RajeshGopinathan, Chief Executive Officer and Managing Director of TCS, said.
FY23 revenue at Rs 2.25 lakh crore, net profit Rs 42,303 crore
For the entire fiscal, TCS has reported a revenue of Rs 2.25 lakh crore, which is 17.6 percent higher as against Rs 1.91 lakh crore recorded in FY22. The net profit in FY23 came in at Rs 42,303 crore, which is also higher as compared to Rs 38,449 crore in the previous year.
Key FY23 performance stats
-Revenue up 13.7% in CC terms
- INR Revenue at Rs 225458 croreup 17.6%
- Dollar revenue at $27,927 million,up 8.6% YoY
- Operatingmargin 24.1%
- 22,600 net additions during the year
Q4 Hiring Update
- Global employee headcount at the end of Q4 is 6,14,795
- 821 net additions during the quarter after decline of 2,197 in the last quarter
- LTM Attrition dropped by 120 basis points and is at 20.1%
Sector wise growth (YoY)
-Retail and CPG up 13%
- Lifesciences & Healthcare up 12.3%
- BFSI up 9.1%
- Manufacturing up 9.1%
- Communication & Media up 5.3%
- Technology and Services up 9.2%
Geography wise growth (YoY)
- India up 13.4%
- UK up 17%
- North America up 9.6%
- Continental Europe up 8.4%
- Latin America up 15%
Key Stats
-Q4FY23 consolidated EBIT margin At 24.5% Vs 24.5% (QoQ)
-Q4FY23 Dollar revenue at $7,195 Million
-Consolidated INR revenue up 1.6% QoQ at Rs 59,162 crore
-Net margins at 19.3%
Final dividend announced
TCS has announced a final dividend of Rs 24 per share.
TCS Q4 revenue up 16.9% YoY
Consolidated revenue from operations came in at Rs59,162 crore, up 16.9 percent from Rs 50,591 crore in the year-ago quarter. Itstood at Rs 58,229 crore in the December quarter of FY23.
TCS Q4 net profit up 14.8% at Rs 11,436 crore
TCS reported a 14.8 percent year-on-year (YoY) increase in consolidated net profit at Rs 11,436 crore for the quarter ended March 31, 2023. The IT services major had reported a profit of Rs 10,846 crore in the December 2022 quarter.
Commentary around BFSI to be keenly watched
Not just TCS, but rivals too will be tracked closely for any commentary on how the BFSI sector crisis will impact demand outlook and overall global client sentiments. This quarter was marked by the collapse of Silicon Valley Bank (SVB), and Signature Bank of the US, followed by Switzerland’s Credit Suisse and the likely impact on the sectors and industries dependent on it.
As of the quarter-ended December,BFSI accounted for over 38 percent of TCS’ revenue.
Watch out for: Commentary on large deal-wins
Irrespective of the global macro challenges, TCS continued to report large multi-year deal-wins last quarter. In February, TCS announced the extension partnership with United Kingdom-based clientPhoenix Group in a $723-million deal. According to media reports, TCS is also set toclose multiple deals worth $1 billionwith British retailer Marks and Spencer (M&S).
While previously TCS had said that it will maintain a QoQ total contract value (TCV) of $7-9 billion, analysts estimate that the company might cross this band in Q4.
Watch out for: Hiring updates
For the first time in the past 10 quarters, TCS reported a slowdown in net new quarterly employee addition at negative 2,197 in Q3FY23. Will there be further slowdown in employee addition, what will be the hiring targets and outlook as we move into FY24 – these will be key questions.
The TCS earnings call, following the declaration of results, will be unlike any other in recent times, as discussions are expected to take an interesting turn amid anticipation for updates on organisational and business restructuring, a new BFSI head, navigating a global macro environment, hiring plans, and more.
All eyes on CEO successor in waiting
An outgoing chief executive officer (CEO). A successor waiting in the wings. A crushing banking crisis -- the January-March quarter has been full of unexpected turns for the country’s biggest information technology (IT) services firm Tata Consultancy Services (TCS).
A source in the know had told Moneycontrol thatCEO-designate K Krithivasan too will be present at the presser even as current CEO and managing director (MD) Rajesh Gopinathan announces the Q4 performance.
What to expect
A poll by CNBC-TV18 shows that overall growth for Q4 is expected to be less than in Q3 as uncertainty continues to prevail amidst a tough business environment. QoQ revenue growth estimates have varied from 0.1 percent to 1.7 percent.
TCS shares up nearly 1% higher
The shares of TCS were edging higher ahead of the results, and valued atRs 3,244 apiece at the BSE at 3:30 pm, which was nearly 1 percent higher as compared to the previous day's close. At the NSE, it valued at Rs 3,245.
How had TCS performed in Q3?
In the December 2022 quarter, TCS had reported a net profit of Rs10,846 crore, which was higher11.02 percent on-year and 3.98 percent sequentially. The consolidated revenue had came in at Rs58,229 crore, which was up 19.11 percent YoY and 5.28 percent QoQ.
TCS stock edge higher at stock market ahead of Q4 results
TCS stock peaked to as high as Rs 3,260 apiece, around one percent above the previous day's close, during the intra-day trade. The company is expected to declare the results of the fourth quarter shortly after the trading hours close.
