Revenue growth of TCS in December quarter stood at 2.2%, quarter-on-quarter (Q-o-Q) in constant currency terms. It stood at 13.5% on year-on-year (Y-o-Y) basis. Earnings before Interest and Taxes (EBIT) margin in the quarter stood at 24.5%. This was a 50-basis point increase over the EBIT margin in the previous quarter.
New deal wins in the quarter stood at US $ 7.8 billion. In spite of the macroeconomic concerns, new deal wins for the company remained healthy in the quarter. Value of new deal wins in the quarter increased Y-o-Y by more than 9%. This may indicate that in spite of the global economic slowdown, spending on technology by companies may decline by less than expectations.
A marginal decline in workforce number was seen by TCS in this quarter. On an annualized basis, attrition rate of the company came down by 600 basis points in the quarter. The management asserted that demand is steady, except for in Europe. Marginal decline in headcount is not a reflection of decline in demand for the business of the company, the management added.
Margins are likely to improve for TCS in 2023. Results of the company allay some fears regarding the short-term prospects of the sector. Medium term prospects of the sector look sanguine. IIFL Capital Services is raising Target Price to EPS ratio for TCS to 24 times. An ADD recommendation is being given for the stock because of its good medium-term prospects.
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