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TCS Q3FY22 Preview: Revenues seen at Rs485,832 million, PAT at Rs101,197 million

12 Jan 2022 , 08:57 AM

Result date: 12th January, 2022

Recommendation: Add

Target price: 4,180

Country’s largest IT services company Tata Consultancy Services Ltd (TCS) is all set to report a strong performance for the December 2021 quarter. Overall demand environment remains strong, even though the quarter is impacted due to lesser number of working days (owing to the festive season).

Company’s revenues are expected to grow 3.2% QoQ, in constant currency (cc) terms. Healthy demand and spending across verticals will be key driver of this growth. Client investments remain robust in the areas of cloud migration and core transformation and this trend is likely to last for next few years.

EBIT margin is estimated at 26.0%, up 40 basis points (bps) QoQ and will be largely driven by rupee depreciation. PAT is likely to grow 5.2% on a sequential basis.

Company’s board will also consider plans to undertake 4th buyback of shares. Details of the same will be revealed along with result announcement.

Important management insights to watch out for:
– Trends in client technology budgets for 2022
– Size and pace of deal conversions for the quarter and deal pipeline
– Outlook on the supply front and attrition trends in the industry

	December 2021 estimates	QoQ change	YoY change
Revenue (US$ mn)	6,473	2.2%	13.5%
Revenue (Rs. mn)	485,832	3.7%	15.6%
EBIT (Rs. mn)	126,502	5.4%	13.1%
EBIT margin	26.0%	40 bps	(60) bps
Profit After Tax (Rs. mn)	101,197	5.2%	16.3%
EPS (Rs.)	27.4	5.2%	18.0%