TCS Q4 results Highlights: Net profit beats estimates, revenue up 3.5%; CEO says quarter of strong deals and execution

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Here's a wrap of TCS Q4 performance

K Krithivasan: We continue look at where we can onboard associates and it takes 6-9 months to train them

--Have onboarded most fresher’s, remaining ones will be onboarded this quarter

CHRO: Pleased to announce wage hikes starting April 1. 4.7% hikes, top performers will see double digit hikes

--No single individual can replace N Ganapathy Subramaniam. We don't intend to appoint a new COO: Krithivasan

--We are distributing duties among senior leadership team: Krithivasan

During the post-earnings presser, Krithivasan said, "We have bottomed out in BFSI and North America. We should start seeing growth."

During the post-earnings presser, Krithivasan said, "We have bottomed out in BFSI and North America. We should start seeing growth."

K Krithivasan says TCS COO N. Ganapathy Subramaniam will be retiring next month after more than 40 years of service.

"This is a quarter of strong deals and execution for us. Continuous focus on operational excellence helped us achieve 26% operating margin."

--Middle East, Africa and LATAM had a very strong growth given our diversification

--Manufacturing continued to have a strong growth 9.7 YoY CC

--Platforms business saw a strong growth

--Customers in $100 million bucket grew by 2 this quarter

--Won more than 200 engagements in AI so far

--AI & Gen AI pipeline doubled in this quarter to $900 mn

N Ganapathy Subramaniam, chief operating officer and executive director, said, “Our Q4 performance is robust, with broad-based deal wins across industries and geographies. Our products and platforms business sparkled with the mega-deal win at Aviva and emerging markets had another stellar growth quarter demonstrating the power of TCS’ diversified portfolio.”

Samir Seksaria, chief financial officer, said, “In FY 2024, our disciplined approach to operations have helped us expand our industry-leading margins. In a challenging environment, we persisted with our long-term investments in workforce reskilling, research and innovation. We will continue to drive efficiencies and competitiveness to capture opportunities for growth with profitability.”

Here's a wrap of TCS Q4 performance

TCS announced annual increments with Chief HR Officer Milind Lakkad stating that top performers will receive double-digit annual increments for financial year 2023-24.

Read more here

--TCS' headcount declined for the first time in 19 years, since the company was listed in 2004.

--TCS said that its headcount declined by 1,759 quarter-on-quarter in the fourth quarter.

--Its headcount has declined by 13,249 employees during the financial year 2023-24.

Read full report here

Here are the segment-wise highlights of TCS' Q4FY24 performance

TCS: FY24 order book TCS (total contract value) at all time high $42.7 billion; record Q4 TCV at $13.2 billion
TCS: Operating margin at 24.6%; net margin at 19.3% (this excludes the one-time charge of $125 million towards settlement of legal claim)

TCS: In a challenging macro environment, clients are prioritizing initiatives that reduce cost, increase business agility, improve security posture and resilience.

Milind Lakkad, Chief HR Officer, said: “We are pleased to announce the annual increments for our workforce, as we have done consistently every year, with top performers receiving double digit hikes. The reduced attrition at 12.5%, enthusiastic response to our campus hiring, increased customer visits and employees returning to the office have resulted in great vibrancy in our delivery centres and elevated morale of our associates."

--Revenue at Rs 61,237 crore, 3.5% up YoY (CC: 2.2%)
--Growth led by India (+37.9%), UK (+6.2%), and Manufacturing (+9.7%)
--Operating Margin: 26.0%; YoY expansion of 150 bps
--Net Margin: 20.3%; YoY expansion of 100 bps
--Net Income: ₹12,434 cr, +9.1% YoY
--Strong Cash conversion: Operating Cash Flow 100.4% of Net Income

K Krithivasan, Chief Executive Officer and Managing Director, said: “We are very pleased to close Q4 and FY24 on a strong note with the highest ever order book and a 26% operating margin, validating the robustness of our business model and execution excellence. In an environment of global macro uncertainty, we are staying close to our customers and helping them execute on their core priorities with TCS’ portfolio of offerings, innovation capabilities and thought leadership.”

TCS said that the board has recommended a final dividend of Rs 28 per share, which shall be paid/dispatched on the fourth day from the conclusion of the 29th Annual General Meeting, subject to approval of the shareholders of the company.

--TCS reported 9.1 percent rise in consolidated net profit at Rs 12,434 crore on year-on-year basis for the quarter ended 31 March, 2024. The IT services firm had reported a net profit of Rs 11,392 crore in the year-ago period.

IT services major Tata Consultancy Services kicked off the earnings season for tech companies with its Q4 FY24 financial results on April 12.

--Sequentially, the net profit rose marginally from previous (Q3FY24) quarter.

--Revenue from operations increased 3.5 percent to Rs 61,237 crore for the said quarter as against Rs 59,162 crore in the corresponding period last fiscal.

--Shares of TCS on April 12 closed almost flat at Rs 1,019.85 apiece on BSE ahead of the earnings report.

--TCS said in its regulatory filing that its board may recommend a final dividend for Q4FY24. "...recommend a final dividend, if any, on the equity shares of the Company for the financial year ending March 31, 2024, for the approval of the shareholders at the ensuing 29th Annual General Meeting."

--For previous quarter (Q3FY24), TCS had approved a dividend of Rs 27 per share, which includes an interim dividend of Rs 9 per equity share and a special dividend of Rs 18 per equity share.

--Brokerages are upbeat on TCS continuing to win new deals. “We expect deal wins to be in the range of $7-9 billion in the quarter (January-March),” said Axis Securities.

--Nuvama too said the brokerage expects TCS’ strong deal-wins streak to continue. HDFC Institutional Equities predicts strong deal bookings at above $10 billion, with several large deals in Europe.

TCS' Q4 revenue growth would be aided by sustained winning of deal, ramp-up of large deals, including BSNL, and recovery in manufacturing and BFSI verticals.

Nuvama expects TCS revenue growth for the quarter to be “driven by a recovery in BFSI and continued strength in manufacturing”, its analysts said in a recent note.

On the other hand, recent deal wins, and ramp-up of the large BSNL deal would also contribute to revenue growth, said Dolat Capital and Phillip Capital in their respective pre-earnings research notes.

Shares of TCS ahead of earnings later today, were trading almost flat at Rs 3,983.30 apiece on BSE at 12:30 pm. TCS stock has risen 4.5 percent so far this year (since January), matching Nifty 50 returns over the same period. But it has far outpaced the Nifty IT index, which fell 0.6 percent year-to-date.

The Q4 revenue in rupee terms for TCS is expected to rise 1.5 percent quarter-on-quarter to Rs 61,414 crore, according to an average of 10 brokerage estimates. Its fourth-quarter net profit may rise 5.8 percent quarter-on-quarter, shows the poll. The company's EBIT margin for the quarter is seen improving to 25.3 percent during the January-March period.