Result Analysis: Tata Consultancy Services Ltd.(CMP: Rs.3242.10) Result Update: Q4FY23

Tata Consultancy Services is the largest IT Company in India and the global leader in IT services, consulting and business solutions with an extensive global network. The company offers a consulting-led, cognitive powered, integrated portfolio of business, technology and engineering services and solutions. It provides services to industries such as BFSI, manufacturing, telecommunications, retail and transportation. The company serves to the world’s biggest conglomerates like Google, Amazon, Apple, IBM, Bosch, Adobe etc.


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    Stock Details
    Market Cap. (Cr.) 1186301
    Equity (Cr.) 365.91
    Face Value 1
    52 Wk. high/low 3739 / 2926
    BSE Code 532540
    NSE Code TCS 
    Book Value (Rs) 265
    Sector IT – Software


    Key Ratios
    Debt-equity: 0.09
    ROCE (%): 53.97
    ROE (%): 44.13
    TTM EPS: 111.18
    P/BV: 12.23
    TTM P/E: 29.16

    Result Highlights:

    • TCS reported marginal increase of 1.6% on sequential basis in the revenues to Rs.59,162 cr. and Net profits increase of 5.1% QoQ to Rs.11,436 cr. in the last quarter of FY23.

    • The earnings were below the broader street expectations; soft earnings growth was mainly due to the pause in discretionary spending of the consumers.

    • EBIT of the company grew by only 1.4% QoQ in the quarter and EBIT margin remained flat at 24.5% comparing to previous quarter.

    • All industries showed slow pace of growth range of 0.9% to 3.9% on quarterly basis. Major contributing segment i.e. BFSI only grew by 2.2% QoQ due to the negative sentiments present in the US and Europe region in BFSI sector. Communication, Media & Technology segment showed negative growth on QoQ basis due to the lower discretionary spending.

    • Major markets i.e. North America and Europe showed growth in the quarter while India and Asia pacific showed slighter degrowth.

    • Order book of TCS is at record high of $10 billion in Q4, relatively strong on QoQ basis, but has decreased 11.5% YoY.

    • Attrition rate dropped to 20.1% vs 21.3% of previous quarter, co. added 821 employees during Q4 taking total headcount to 6,14,795.

    • Board of the company approved a final dividend of Rs.24/share for the last quarter.

    • In the concall, management highlighted the demand softness in North America region, UK remains robust while Europe is seeing bounce back in demand.

    Financial Performance:


    Shareholding Pattern:

    Particulars %
    Promoters & Group 72.30
    FIIs 13.16
    DIIs 9.31
    Public 4.98
    Others 0.25

    Management Commentary:

    • Commenting on March quarter results, Rajesh Gopinathan, CEO and MD said, “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.”

    • Samir Seksaria, CFO, said, “FY 23 was a year of transition, as supply-side challenges abated while pandemic-depressed travel and discretionary spends normalized. We navigated this change well and our longer term competitiveness remains intact, giving us industry-leading profitability even as we pursue our growth aspirations.”


    TCS reported slightly below estimated earnings in Q4FY23 result majorly due to the slowdown in discretionary projects in America and Europe region. Due to negative sentiment in BFSI segment several projects were put on hold or postponed. Overall this segment remains watchful with short to medium term view due to the prevailing macro situation. Margins of the company also impacted due to the subdued revenue growth. With higher focus on the cost optimization, TCV of the company remains robust with medium term deals.  Looking at the macro environment, near to medium term path for the company remains cautious as of now. However, we remain positive on the TCS with longer term perspective.


    Particulars (In Rs. Cr.) Q4FY23 Q3FY23 Q4FY22 QoQ% YoY% FY23 FY22 YoY%
    Revenue from Operations 59,162 58,229 50,591 1.6% 16.9% 2,25,458 1,91,754 17.6%
    Other Income 1175 520 981 126.0% 19.8% 3,449 4,018 -14.2%
    Total Income 60,337 58,749 51,572 2.7% 17.0% 2,28,907 1,95,772 16.9%
    Employee Benefit Expenses 33,687 32,467 28,353 3.8% 18.8% 1,27,522 1,07,554 18.6%
    Employee benefit Expenses as % of Sales 56.9% 55.8% 56.0% 110 bps 90 bps 56.56% 56.09% 47 bps
    Cost of Equipment & Software Licences 620 643 260 -3.6% 138.5% 1,881 1,163 61.7%
    Depreciation & Amortisation Expense 1,286 1,269 1,217 1.3% 5.7% 5,022 4,604 9.1%
    Other Expense 9,081 9,566 8,133 -5.1% 11.7% 36,796 29,980 22.7%
    EBIT 14488 14284 12628 1.4% 14.7% 54,237 48,453 11.9%
    EBIT Margin 24.5% 24.5% 25.0% -50 bps 24.1% 25.3% -120 bps
    Profit After Tax (PAT) 11,436 10,883 9,959 5.1% 14.8% 42,303 38,449 10.0%
    PATM (%) 19.3% 18.7% 19.7% 60 bps -40 bps 18.8% 20.1% -130 bps
    EPS (in Rs.) 31.14 29.64 26.85 5.1% 16.0% 115.19 103.62 11.2%
    Segment Revenue (In Rs. Cr.) Q4FY23 Q3FY23 Q4FY22 QoQ% YoY% FY23 FY22 YoY%
    BFSI 22,628 22,145 19,532 2.2% 15.9% 86,127 75,126 14.6%
    Manufacturing 5,550 5,428 4,951 2.2% 12.1% 21,236 18,610 14.1%
    Retail and – Consumer Business 9,773 9,661 8,209 1.2% 19.1% 37,506 30,715 22.1%
    Communication, Media and Technology 9,696 9,753 8,475 -0.6% 14.4% 37,653 31,874 18.1%
    Life Sciences and Healthcare 6,585 6,354 5,416 3.6% 21.6% 24,605 20,462 20.2%
    Others 4,930 4,888 4,008 0.9% 23.0% 18,331 14,967 22.5%
    Geography Revenue % Q4FY23 Q4FY22 YoY FY23 FY22 YoY
    North America 52.4 51.6 80 bps 53.4 50.5 290 bps
    Latin America 1.8 1.7 10 bps 1.8 1.7 10 bps
    UK 15.7 15.6 10 bps 15.0 15.9 -90 bps
    Continental Europe 15.1 15.5 40 bps 14.9 16.0 -110 bps
    Asia Pacific 8.0 8.5 -50 bps 8.0 8.8 -80 bps
    India 5.0 5.1 -10 bps 5.0 5.1 -10 bps
    MEA 2.0 2.0 1.9 2.0 -10 bps
    Source: Company website, EWL Research

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