Q3FY23 Preview: TCS: Revenues seen at Rs572,262 million, PAT at Rs111,669 million

8 Jan 2023 , 11:54 AM

Result date: 9^th January, 2023

Recommendation: Add

Target price: Rs3,450

 

Tata Consultancy Services (TCS), India’s leading IT services company could post 1.4% growth in constant currency in December 2022 quarter, on a sequential basis. Typical Q3 seasonality on account of holidays could impact growth. Ramp-up of previously won deals could partly offset by seasonal furloughs. 

Analysts at IIFL Capital Services expect margins to expand by 60 basis points sequentially, driven by easing supply side and INR depreciation versus USD. They expect deal wins to remain healthy. 

TCS could witness 7.1% sequential growth in Profit After Tax (PAT) for the quarter.

Important management insights to watch out for:

• Deal-win momentum and nature of deals
• Early signs of clients’ CY23 technology budgets
• Potential impact on margins from easing supply side
•  Capital allocation

	December 2022 estimates	QoQ change	YoY change
Revenue (US$ mn)	6,959	1.2%	6.7%
Revenue (Rs. mn)	572,262	3.5%	17.1%
EBIT (Rs. mn)	140,766	6.0%	15.0%
EBIT margin	24.6%	60 bps	(40) bps
Profit After Tax (Rs. mn)	111,669	7.1%	14.3%
EPS (Rs.)	30.5	7.1%	15.6%

Source: IIFL Research