Q3FY24 Preview: Tata Consultancy Services: Revenues seen at Rs. 592,446 million, PAT at Rs. 120,762 million

9 Jan 2024 , 10:44 AM

Result date: January 11, 2023

Recommendation: Add

Target price: Rs. 3,900    

Analysts at IIFL Capital Services are forecasting revenue decline of 0.4% cc sequentially in the December 2023 quarter, on continued weakness in discretionary spend and furloughs, partially offset by ramp up of previously won deals. Margins should expand 70 basis points sequentially, due to the continued easing supply side, productivity improvement and muted hiring. Deal wins are likely to remain healthy, driven by cost take out deals.

The company’s Profit After Tax or PAT could grow 6.5% sequentially.

Important management insights to watch out for:

• Initial discussion around CY24 tech budgets with clients
• Deal win TCV and decision-making cycles
• Ramp-up timelines for deals
• Potential margin levers through FY24

	December 2023 estimates	QoQ change	YoY change
Revenue (US$ mn)	7,138	(1.0)%	0.9%
Revenue (Rs. mn)	592,446	(0.7)%	1.7%
EBIT (Rs. mn)	147,840	2.1%	3.5%
EBIT margin	25.0%	70 bps	40 bps
Profit After Tax (Rs. mn)	120,762	6.5%	11.3%
EPS (Rs.)	33.0	6.5%	11.3%

Source: IIFL Research