InvestorQ : What are the major takeaways from the TCS results for June quarter? Can I buy the stock in the market now?
vaishnavi mhatre made post

What are the major takeaways from the TCS results for June quarter? Can I buy the stock in the market now?

Answer
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diksha shah answered.
1 year ago


TCS, as usual, was the first major company to declare its quarterly results for the June quarter. While the growth rates in revenues and profits came under some pressure, the numbers were still than street expectations. Here are some of the key aspects for you to understand about the June quarter results.

1) For the June quarter, TCS reported revenues of Rs.38,172 crore showing a revenue growth of 11.4% on a YOY basis. This was lower than the 17-18% growth in profits that TCS reported in the last few quarters.

2) Net profits for the quarter were at Rs.8,131 crore growing at 10.7% on a YOY basis. This was also lower than the 17% growth that TCS clocked in the last few quarters.

3) There was pressure on wage costs as the new Trump visa rules forced TCS to look for more recruitment at global locations. This led to the operating margins falling from 25.1% to 24.2%; a fall of nearly 90 bps. Net profit margins were also lower at 21% but TCS still enjoys the best margins among the industry majors.

4) The good news for TCS could be that the digital revenues now account for over 30% of sales and have been consistently growing at over 40% on a YOY basis. It is this digital revenue encompassing social media, analytics, cloud and AI that is driving the growth of TCS.

5) Overall, the faster growth in UK and EU markets has made up for the relative slower growth in the Asian and US markets.

Your decision to buy TCS should be driven by the market sentiments on other factors. For example, the stock of TCS will be hit by other factors like the tax on buyback and the higher public shareholding. It is better to wait and observe the stock stabilizing with greater clarity on these issues.