{"id":157685,"date":"2024-01-12T04:36:22","date_gmt":"2024-01-12T09:36:22","guid":{"rendered":"https:\/\/44.250.171.167\/?p=157685"},"modified":"2024-01-12T04:36:23","modified_gmt":"2024-01-12T09:36:23","slug":"tata-consultancy-services-ltd-q3-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/tata-consultancy-services-ltd-q3-fy24-earnings-conference-call-insights\/","title":{"rendered":"Tata Consultancy Services Ltd Q3 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Tata Consultancy Services Ltd (TCS) Q3 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Q3 Financial Performance<\/strong>\n<ul>\n<li>Revenue grew 4% in rupees, 1.7% in constant currency, and 2.9% in dollars YoY.<\/li>\n<li>Operating margin was 25% and net margin was 19.4%.<\/li>\n<li>Continued momentum in deal wins across markets.<\/li>\n<li>Focused effort to reduce unbilled revenue in 4Q; helps improve visibility on collections.<\/li>\n<\/ul>\n<\/li>\n<li><strong>BSNL Partnership<\/strong>\n<ul>\n<li>Started delivering equipment and services for BSNL&#8217;s 4G and 5G networks.<\/li>\n<li>Installed about 2,000 sites and progressing on data centers.<\/li>\n<li>Rollout over next 4-6 quarters as originally planned.<\/li>\n<li>Acting as a systems integrator partnering with other OEMs.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Operating Metrics<\/strong>\n<ul>\n<li>Accounts receivable increased by 2 days sequentially to 67 days.<\/li>\n<li>102% cash conversion; free cash flow of INR 103.52 billion.<\/li>\n<li>LTM IT services attrition declined 1.6% sequentially to 13.3%.<\/li>\n<li>603,305 total workforce; 153 nationalities represented; 39.7 million learning hours YTD.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Segment Performance<\/strong>\n<ul>\n<li>Energy, resources and utilities grew 11.8%.<\/li>\n<li>Manufacturing grew 7%.<\/li>\n<li>Life sciences and healthcare grew 3.1%.<\/li>\n<li>UK led major markets with 8.1% growth, while India led emerging markets with 23.4% growth.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Products and Platforms Highlights<\/strong>\n<ul>\n<li>Ignio had 27 new deals and 6 go-lives.<\/li>\n<li>TCS BaNCS had 6 wins and 3 go-lives, including a major deal with ASX in Australia.<\/li>\n<li>TCS iON had 32 new wins and administered exams for 14.5 million candidates.<\/li>\n<li>TCS TwinX had 4 wins, including for a major North American delivery company.<\/li>\n<li>35 new clients for MasterCraft and Jile.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Demand Environment<\/strong>\n<ul>\n<li>Enterprises prioritizing business-critical projects with fast ROI.<\/li>\n<li>Pent-up demand exists due to caution around investments.<\/li>\n<li>Expect customers to scale strategic growth initiatives once macro risks recede.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Order Book Resilience<\/strong>\n<ul>\n<li>Strong TCV of $8.1 billion and book-to-bill ratio of 1.1.<\/li>\n<li>Trailing 12-month order book grew 11.3% year-over-year.<\/li>\n<li>BFSI order book was $2.6 billion.<\/li>\n<li>North America TCV was $4.2 billion.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Generative AI<\/strong>\n<ul>\n<li>Launching offerings across industry value chains and SDLC.<\/li>\n<li>Enhancing products like Optumera, TCS ADD, and TwinX with Gen AI.<\/li>\n<li>Working with clients on use cases like customer service, sales support, HR policy, etc.<\/li>\n<li>Partnering on Gen AI centers of excellence and advisory services.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Cloud Demand<\/strong>\n<ul>\n<li>Investment in cloud becoming more meaningful over time.<\/li>\n<li>Focus on optimizing consumption and fine-tuning strategies.<\/li>\n<li>Partnering on cloud transformation across industries like retail and airlines.<\/li>\n<li>Seeing significant demand around cloud migration and transformation.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Margin Improvement Outlook<\/strong>\n<ul>\n<li>Margin improvement cycle has more room given attrition and supply improvement.<\/li>\n<li>Delivered margin expansion despite large deal ramp-ups.<\/li>\n<li>Additional levers like productivity, utilization, realization to drive further optimization.<\/li>\n<li>Remain committed to 26-28% over medium term.<\/li>\n<li>Further room in subcontractor costs compared to pre-COVID.<\/li>\n<li>Normal headwinds like increments in Q1.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Deal Flow and Demand<\/strong>\n<ul>\n<li>TCV lumpy by nature, don&#8217;t view Q3 as soft.<\/li>\n<li>See no signs of softness in demand environment.<\/li>\n<li>Demand tone similar to previous quarters.<\/li>\n<li>Seeing green shoots in some verticals like manufacturing and consumer.<\/li>\n<li>Clients remain agile on budgets given uncertainty.<\/li>\n<\/ul>\n<\/li>\n<li><strong>BFSI Growth Trends<\/strong>\n<ul>\n<li>Adjusting for specific items, BFSI grew sequentially.<\/li>\n<li>Broad-based deal momentum across markets.<\/li>\n<li>Momentum from deal wins should drive growth in Q4 and beyond.<\/li>\n<li>Gaining share even as overall growth moderates.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Europe Performance<\/strong>\n<ul>\n<li>Europe pipeline and TCV improved sequentially.<\/li>\n<li>Europe grew faster than North America in Q3.<\/li>\n<li>Expect return to growth in Europe medium-term.<\/li>\n<li>Anticipate growth returning in North America as well.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Discretionary Spending<\/strong>\n<ul>\n<li>Proportion of discretionary vs non-discretionary similar to prior quarters.<\/li>\n<li>No significant change or tilt observed.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Tata Consultancy Services Ltd (TCS) Q3 FY24 Earnings Concall Q3 Financial Performance Revenue grew 4% in rupees, 1.7% in constant currency, and 2.9% in dollars YoY. Operating margin was 25% and net margin was 19.4%. Continued momentum in deal wins across markets. Focused effort to reduce unbilled revenue in 4Q; helps improve [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,8],"tags":[8588,10169,5075,9124],"class_list":["post-157685","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-technology-stocks","tag-consulting","tag-earnings","tag-it-services","tag-software-technology-services"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":160322,"url":"https:\/\/alphastreet.com\/india\/tata-consultancy-services-ltd-q4-fy24-earnings-conference-call-insights\/","url_meta":{"origin":157685,"position":0},"title":"Tata Consultancy Services Ltd Q4 FY24 Earnings Conference Call Insights","author":"Praveen","date":"April 12, 2024","format":false,"excerpt":"Key highlights from Tata Consultancy Services Ltd (TCS) Q4 FY24 Earnings Concall Revenue Growth Q4 revenue grew 2.2% YoY in constant currency, 3.5% in rupee terms. 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