{"id":160322,"date":"2024-04-12T13:24:02","date_gmt":"2024-04-12T17:24:02","guid":{"rendered":"https:\/\/44.250.171.167\/?p=160322"},"modified":"2024-04-12T13:24:03","modified_gmt":"2024-04-12T17:24:03","slug":"tata-consultancy-services-ltd-q4-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/tata-consultancy-services-ltd-q4-fy24-earnings-conference-call-insights\/","title":{"rendered":"Tata Consultancy Services Ltd Q4 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Tata Consultancy Services Ltd (TCS) Q4 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Revenue Growth<\/strong>\n<ul>\n<li>Q4 revenue grew 2.2% YoY in constant currency, 3.5% in rupee terms.<\/li>\n<li>FY24 revenue grew 3.4% YoY in constant currency, 6.8% in rupee terms, 4.1% in dollar terms.<\/li>\n<li>Regional markets led growth at 26%, followed by Manufacturing 9.7% and Energy, Resources &amp; Utilities 7.3%.<\/li>\n<li>United Kingdom led among major markets with 6.2% growth.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Profitability<\/strong>\n<ul>\n<li>Q4 operating margin at 26%, expansion of 100 bps sequentially.<\/li>\n<li>FY24 operating margin at 24.6%, expansion of 50 bps YoY.<\/li>\n<li>Net margin in Q4 at 20.3%, FY24 net margin at 19.3%.<\/li>\n<li>Annual EPS grew 10.9% during FY24.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Products and Platforms<\/strong>\n<ul>\n<li>Ignio cognitive automation suite saw 32 new deal wins and 6 go-lives.<\/li>\n<li>TCS BaNCS had 8 new wins, including Central Bank for core banking modernization.<\/li>\n<li>Aviva expanded partnership for 15 years to transform life business using TCS BaNCS.<\/li>\n<li>TCS Optumera pricing optimization platform expanded to Belgium retail client.<\/li>\n<li>TCS iON assessment platform had 22 new wins, administered exams for 13.9 million candidates.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Talent and Workforce<\/strong>\n<ul>\n<li>Workforce at 601,546 at Q4 end.<\/li>\n<li>IT services attrition at 12.5%, down 80 bps sequentially.<\/li>\n<li>Employees logged 51 million learning hours, acquired 5 million competencies in FY24.<\/li>\n<li>Annual salary increments announced, with top performers receiving double-digit hikes.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Generative AI<\/strong>\n<ul>\n<li>Customers exploring GenAI for application development, maintenance, automation.<\/li>\n<li>TCS partnered with manufacturers to leverage GenAI for duplicate part identification, service instructions.<\/li>\n<li>Scaling out GenAI PoCs and pilots with necessary guidelines.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Growth Outlook<\/strong>\n<ul>\n<li>Confusion raised about strong TCV but unclear near-term growth outlook.<\/li>\n<li>TCS had one mega-deal, other deals were of normal size.<\/li>\n<li>High number of recent deal wins gives confidence in growth returning over time.<\/li>\n<\/ul>\n<\/li>\n<li><strong>India Business<\/strong>\n<ul>\n<li>India market has matured and TCS is selective about right deals.<\/li>\n<li>Many large enterprises in India embarking on new technology programs.<\/li>\n<li>TCS sees further upside from levers like pricing, utilization if risks recede.<\/li>\n<li>Q1 to see impact of increments, but overall focus on disciplined execution.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Demand Environment<\/strong>\n<ul>\n<li>TCS comfortable with typical conversion rates from recent deal wins.<\/li>\n<li>Clients balancing transformative projects with cost optimization initiatives.<\/li>\n<li>AI transition a huge focus area across organizations currently.<\/li>\n<\/ul>\n<\/li>\n<li><strong>TCV Composition And Margin Levers<\/strong>\n<ul>\n<li>No change in renewal vs. new revenue mix.<\/li>\n<li>New revenue component stronger, allaying concerns over TCV composition.<\/li>\n<li>Incremental margins to be driven by pricing improvements.<\/li>\n<li>Structured pricing increases through renewals, new deals expected to aid margins.<\/li>\n<\/ul>\n<\/li>\n<li><strong>BSNL Deal and Growth Visibility<\/strong>\n<ul>\n<li>Opportunities for subsequent work like 5G upgrades, maintenance, increasing tower count.<\/li>\n<li>Indigenously developed solution presents market opportunity for other operators.<\/li>\n<li>Unpredictability in customers deprioritizing discretionary projects.<\/li>\n<li>Vertical-wise, prioritization driven by individual customer sentiments and ROI assessment.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Margin Trajectory<\/strong>\n<ul>\n<li>Expects a similar pattern of Q1 impact from increments\/headwinds for FY25.<\/li>\n<li>Margins to then improve through the year as they claw back.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Pent-up Demand<\/strong>\n<ul>\n<li>TCS saw pent-up demand in retail segment last quarter and BFSI this quarter.<\/li>\n<li>Catalyst would be customers&#8217; comfort with their demand environment, market outlook.<\/li>\n<li>Already seeing green shoots in consumer business verticals like airlines, transportation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>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. FY24 revenue grew 3.4% YoY in constant currency, 6.8% in rupee terms, 4.1% in dollar terms. Regional markets led growth at 26%, followed by Manufacturing 9.7% and Energy, Resources [&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-160322","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":157726,"url":"https:\/\/alphastreet.com\/india\/hcl-technologies-limited-q3-fy24-earnings-conference-call-insights\/","url_meta":{"origin":160322,"position":0},"title":"HCL Technologies Limited Q3 FY24 Earnings Conference Call Insights","author":"Praveen","date":"January 16, 2024","format":false,"excerpt":"Key highlights from HCL Technologies Limited (HCLTECH) Q3 FY24 Earnings Concall Revenue Growth and Margins Revenue grew 6% sequentially and 4.3% YonY in constant currency, the highest growth since Q3 2021. 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