TCS Q4 Review – Growth Confidence Continues; Operating Profit Margin To Face Headwinds: Dolat Capital

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Tata Consultancy Services Ltd. reported revenue growth of 3.2% QoQ in constant currency terms (our estimate: 3.2%) led by strong traction across verticals.

Operating profit margin declined by 7 basis points QoQ to 25% (our estimate: 24.7%) due to supply-led headwinds (headcount up 6.3% QoQ). Announced dividend per share of Rs 22.

Reported best ever total contract value wins at $ 11.3 billion; taking the trailing twelve months TCV to $ 34.6 billion (up 9.8% YoY) with 1.35 times revenue coverage.

Q4 had two mega deals (~ 1 billion $ plus each) with 7 to 10-year tenure. TCS highlighted that pipeline continues to remain strong with fairly even deal sizes.

TCS continues to be confident on multi-year growth opportunity and on sustainability of the demand as it highlighted that tech spends are last item that get shrink even in worsened macro-condition.

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