TCS Q3 Review - Growth Confidence Continues; Feels The Attrition Pain In Margins: Dolat Capital
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Dolat Capital Report
Tata Consultancy Services Ltd. reported revenue growth of ~4% QoQ in constant currency terms (our estimate: 3.2%) led by strong traction across verticals (Europe recovered).
Operating profit margin declined by 57 basis points QoQ to 25% (our estimate: 25.7%) due to increased sub-con, backfilling costs, training-recruitment and supply-side inflationary challenges. Announced dividend per share of Rs 7 and buyback of Rs 180 billion at Rs 4500/share.
Total contract value wins were modest at $7.6 billion (flat QoQ) given the current robust demand environment.
The trailing twelve months TCV marginally increased to $32.5 billion with 1.3 times revenue coverage. TCS highlighted that the miss was on account of long-cycles and infrequencies of mega deals.
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