TCS Q4 results: Why did IT major's sequential growth miss the mark?
Business Today had previously reported that the banking crisis would most likely take a toll on Indian IT companies since the BFSI sector is a major contributor to the sector's revenues.
- Apr 13, 2023,
- Updated Apr 13, 2023 2:16 PM IST
Tata Consultancy Services (TCS), India’s largest IT services exporter, reported revenue growth of 0.6 per cent in constant currency terms for the March quarter, below analyst as well as the company's estimates. In an exchange with Business Today, TCS Chief Operating Officer N. Ganapathy Subramaniam explained that the global banking crisis that emerged in February dented the company's growth projections.
Subramaniam told Business Today that the company’s clients took a cautious approach and deferred contracts wherever they could because of the banking crisis.
"Wherever they could defer the projects, they did. I want to, again, be very clear that it's only a deferment and we have not seen any large-scale cancellations or huge ramp downs per se, in financial services. But North America people have become a little cautious and tentative," he said.
Earlier in the month of March, several global banks like the Silicon Valley Bank, Silvergate Bank, the Credit Suisse Bank, the First Republic Bank, and others collapsed. Business Today reported previously that the banking crisis would most likely take a toll on Indian IT companies since the BFSI sector is a major contributor to the sector's revenues.
“0.6 per cent sequential growth came in certainly lower than what we expected ourselves. We were expecting somewhere in the region of 1.5 per cent to 2 per cent as a quarterly growth, as we stepped into the new year, put it this way," he said.
The COO further explained, "But then, especially in towards the middle of February and March, the banking crisis that happened, which kind of slowed down things a bit, many of our customers felt that it's time to be a little cautious. Let's spend wisely, got to adjust the budgets for the year because we don't know what's going to happen. So, let's spend cautiously."
Despite the dent in growth projections in Q4 FY 2022-23, Subramaniam remains positive about the outlook of the industry.
"Overall, I think I don't see fundamentally anything wrong in the technology sector right. Especially in the IT services side. We have done $10 billion worth of order bookings during the last quarter, and it's very broad based across industries, across geographies, and out of this $10 billion, $5 billion came in from North American clients, about $3 billion came in from banking, financial services clients, $1.3 billion came in from retail, consumer product services clients," he noted.
He also added, "I think the environment remains quite stable and there is an optimism."
On Wednesday TCS announced its Q4 FY 23 results. Consolidated revenue from operations rose 17.58 per cent YoY to Rs 2,25,458 crore in FY23 against Rs 1,91,754 crore in FY22. Furthermore, the net profit of the IT firm jumped 9.97 per cent YoY to Rs 42,147 crore for the year ended March 2023.
Gross sales increased by 16.94 per cent YoY to Rs 59,162 crore for the quarter that ended March 31, 2023. The figure stood at Rs 58,229 crore in the same quarter a year ago. On the other hand, profit attributable to shareholders of the company witnessed a rise of 14.77 per cent to Rs 11,392 crore during the quarter under review.
Also Read: TCS, Infosys Wipro: How Credit Suisse, SVB collapse can impact Indian IT sector - BusinessToday
Tata Consultancy Services (TCS), India’s largest IT services exporter, reported revenue growth of 0.6 per cent in constant currency terms for the March quarter, below analyst as well as the company's estimates. In an exchange with Business Today, TCS Chief Operating Officer N. Ganapathy Subramaniam explained that the global banking crisis that emerged in February dented the company's growth projections.
Subramaniam told Business Today that the company’s clients took a cautious approach and deferred contracts wherever they could because of the banking crisis.
"Wherever they could defer the projects, they did. I want to, again, be very clear that it's only a deferment and we have not seen any large-scale cancellations or huge ramp downs per se, in financial services. But North America people have become a little cautious and tentative," he said.
Earlier in the month of March, several global banks like the Silicon Valley Bank, Silvergate Bank, the Credit Suisse Bank, the First Republic Bank, and others collapsed. Business Today reported previously that the banking crisis would most likely take a toll on Indian IT companies since the BFSI sector is a major contributor to the sector's revenues.
“0.6 per cent sequential growth came in certainly lower than what we expected ourselves. We were expecting somewhere in the region of 1.5 per cent to 2 per cent as a quarterly growth, as we stepped into the new year, put it this way," he said.
The COO further explained, "But then, especially in towards the middle of February and March, the banking crisis that happened, which kind of slowed down things a bit, many of our customers felt that it's time to be a little cautious. Let's spend wisely, got to adjust the budgets for the year because we don't know what's going to happen. So, let's spend cautiously."
Despite the dent in growth projections in Q4 FY 2022-23, Subramaniam remains positive about the outlook of the industry.
"Overall, I think I don't see fundamentally anything wrong in the technology sector right. Especially in the IT services side. We have done $10 billion worth of order bookings during the last quarter, and it's very broad based across industries, across geographies, and out of this $10 billion, $5 billion came in from North American clients, about $3 billion came in from banking, financial services clients, $1.3 billion came in from retail, consumer product services clients," he noted.
He also added, "I think the environment remains quite stable and there is an optimism."
On Wednesday TCS announced its Q4 FY 23 results. Consolidated revenue from operations rose 17.58 per cent YoY to Rs 2,25,458 crore in FY23 against Rs 1,91,754 crore in FY22. Furthermore, the net profit of the IT firm jumped 9.97 per cent YoY to Rs 42,147 crore for the year ended March 2023.
Gross sales increased by 16.94 per cent YoY to Rs 59,162 crore for the quarter that ended March 31, 2023. The figure stood at Rs 58,229 crore in the same quarter a year ago. On the other hand, profit attributable to shareholders of the company witnessed a rise of 14.77 per cent to Rs 11,392 crore during the quarter under review.
Also Read: TCS, Infosys Wipro: How Credit Suisse, SVB collapse can impact Indian IT sector - BusinessToday