TCS Q2 Results Review – On Expected Lines: ICICI Securities


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Tata Consultancy Services Ltd. has reported better-than-expected revenue growth of 4% QoQ in constant currency terms versus our/consensus expectations of 3.4%/3.5% for Q2 FY23. However, U.S. dollar revenue growth was lower at 1.4% QoQ due to cross-currency headwinds of 260 bps QoQ.

Sequential revenue growth was led by technology and services, life sciences and healthcare, manufacturing and retail and consumer packaged goods. Financial services reported below company average growth in Q2 FY23 due to weakness in insurance segment.

In terms of markets, U.S. led with 3.3% QoQ U.S. dollar growth. Broad based revenue growth and margins in line with estimates despite rising attrition were comforting.

TCS’ deal total contract value was healthy at $8.1 billion, but growth in TCV was modest at 6.6% YoY, down 1.2% QoQ. Book-to-bill was healthy at 1.2 times. However, management alluded elongation of decision-making cycle reflected in qualified deal pipeline growing at slower pace than overall pipeline.

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