TCS Q4FY24 Earnings Preview: Key Factors to Watch

TCS Q4FY24 Earnings Preview

Tata Consultancy Services (TCS), India’s largest IT services company, is gearing up to announce its fourth-quarter results on April 12. As the industry eagerly awaits the outcome, here are the top five factors that will likely shape the discussion around TCS’ performance and future outlook.

1. Revenue Growth: TCS’ Q4 revenue is anticipated to hover around Rs 60,559 crores, reflecting a modest 2.36 percent year-on-year (YoY) growth and remaining flat sequentially. The company’s net profit is estimated to reach Rs 11,739 crores, indicating a 3.05 percent YoY increase and a robust 6.16 percent sequential growth. Despite a challenging business environment marked by delayed deal closures and macroeconomic challenges, TCS’ revenue trajectory remains resilient, buoyed by strategic initiatives and market positioning.

2. Demand Outlook: While TCS hasn’t reported any mega deals in Q4, it secured several multi-year, multi-million dollar contracts from prominent clients such as Aviva, Ramboll, and the Central Bank in the US. Analysts anticipate a healthy order book, signalling sustained demand for TCS’ services. Attention will be focused on the revival of discretionary spending and the performance of key verticals like BFSI and geographies like North America.

3. Hiring Plans and Furloughs: TCS witnessed a decline in headcount for the second consecutive quarter, but remains committed to hiring 40,000 freshers as planned for FY24. The reversal of furloughs in Q4 is expected to bolster business operations. Insights into TCS’ hiring strategy for FY25 and efforts to mitigate attrition will be closely monitored.

4. Generative AI Plans: With over 250 generative AI projects in the pipeline, TCS is poised to capitalize on the growing demand for AI solutions. The company’s approach to scaling generative AI initiatives and transitioning proof of concepts (PoCs) to production will be scrutinized, especially in comparison to industry peers like Accenture.

5. Commentary on FY25 Growth: Amidst ongoing industry dynamics and the AI boom, TCS aims to strengthen its AI strategy and expand into emerging segments such as semiconductors, electric vehicles (EVs), and AI. CEO K Krithivasan’s outlook on FY25 and insights into customer sentiments and budget allocations will offer valuable insights into the company’s growth trajectory and strategic direction.

As TCS navigates the evolving landscape of digital transformation and technology adoption, its Q4FY24 earnings and management commentary will provide stakeholders with critical insights into the company’s performance, resilience, and growth prospects in the dynamic IT services market.

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