TCS (TCS)
Why the stock moved
Strong Q3 earnings beat expectations with 12% YoY revenue growth driven by increased digital transformation deals.
In-depth analysis
TCS reported stellar quarterly results with revenue of ₹62,613 crores, marking a 12% YoY growth. The company secured multiple large deals in BFSI and retail sectors, particularly in cloud migration and AI implementation projects. North American market showed robust growth at 15%, while European operations recovered with 8% growth.
Key highlights
- Deal Wins: Secured $2.5 billion in new TCV deals this quarter
- Digital Revenue: Now constitutes 62% of total revenue, up from 55% last year
- Operating Margin: Improved to 25.2%, highest in 3 years
- Headcount: Added 15,000 employees, focusing on AI and cloud skills
- GenAI Initiatives: Launched 5 new AI-powered solutions for enterprise clients
Outlook
Management guides for 8-10% constant currency revenue growth for FY2025. Focus remains on expanding AI and GenAI capabilities, with plans to invest $500 million in AI research. The company is well-positioned to capitalize on the ongoing digital transformation wave.
Risk factors
Potential risks include currency headwinds, visa restrictions impacting talent deployment, and increased competition from niche players in AI/ML services. Slowing global economy might lead to reduced IT spending by clients.