The shares of Tata Consultancy Services (TCS) is all set to remain in focus tomorrow, April 15 after posting its fourth quarter results on Friday. The IT major reported its financial results for the quarter ending on March 31, 2024 beating market estimates.
Since the TCS results were announced after the Indian stock market closed on Friday, it’s anticipated that the TCS share price will respond to these upbeat Q4 results come Monday.
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“Investors are now looking to Infosys’ upcoming results on April 18 to gauge the IT sector’s recovery status. Technically, TCS stock is trading between 3900 and 4025, and a breakout above 4025 could drive the stock towards 4200 and 4250. A strong support level is seen at 3900 post-positive results,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
The company disclosed a consolidated net profit of ₹12,434 crore for the fourth quarter of the fiscal year 2023-24, marking a 9 percent increase from the ₹11,392 crore reported in the corresponding period of the previous financial year. Its revenue from operations rose by 3.5 percent year-on-year to ₹61,237 crore.
“TCS reported Q4 results that exceeded market expectations, with a focus on strong order inflow. Operating profit (EBIT) growth slightly surpassed forecasts, but revenue growth remained flat compared to the previous quarter. Despite concerns about a challenging environment, TCS outperformed IT peers following Accenture’s guidance downgrade. While there were weaknesses in revenue from the BFSI segment and North America region, TCS’ overall performance aligned with expectations, especially with a record-high order book for Q4FY24,” Tapse added.
Also read: TCS Q4 result: Revenue up 4%, profit rises 9% YoY; top 5 highlights from March quarter scorecard
Analysts are expecting an uptick in the IT major stock. “The quarter completes one year for the new management and the continuity and benefits from that are now bound to show in the coming quarter extending the operational improvements that we have already seen. Since the IT spending budgets have been finalized by the end of March, we expect an uptick in deal acquisitions and project ramp-ups commencing in Q1FY25, thus reinforcing TCS’s optimistic outlook,” said Dhruv Mudaraddi, Research Analyst at StoxBox.
They asserted that the TCS share price encounters a barrier at ₹4,250 per share. Upon surpassing this threshold, it is anticipated that the TCS share price will ascend to levels of ₹4,530 and ₹4,720 per share in the medium term.
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Tata Consultancy Services (TCS) has issued a final notice to employees who are continuing to work remotely, directing them to resume office duties starting from March. Although the IT behemoth has granted an extension until the upcoming month, they have emphasized that this extension will be the last, and any failure to adhere to the directive will result in significant repercussions, as reported by The Economic Times.
TCS’s Chief Operating Officer, NG Subramaniam, confirmed this information to the publication, highlighting concerns regarding work culture and security issues as primary considerations associated with remote work.
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“We are exercising patience but have taken a principled stand that employees have to get back to offices. We have sent employees the final communication on this and if they do not, there will be consequences to face,” he said adding that work from home have made both employees and employers vulnerable.
“With the kind of cyberattacks in today’s context, an organisation can inadvertently get into trouble. One cannot have the kind of controls at home and there can be security risks to businesses,” Subramaniam was further quoted as saying by ET.
During the fiscal third quarter, Infosys, India’s second-largest IT firm, disclosed that one of its US units encountered a cyber security incident, leading to the unavailability of multiple applications. Similarly, in December, HCLTech reported a ransomware attack, although it claimed there was no discernible impact.
In contrast, TCS is shifting its focus from the 25-by-25 hybrid model, which it had introduced during the Covid-19 outbreak, aiming to restore the pre-pandemic work culture. In 2020, the company had announced that once all employees returned to the office, a quarter of them would work remotely by 2025.
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During the earnings announcement for the December quarter on January 11, TCS revealed that 65% of its workforce had been attending the office for up to three days a week.
“We are very clear that we have to get our original culture back. Around 40,000 employees joined us online and quit online without any offline interaction during the pandemic and that kind of situation cannot be helpful to an organisation,” he added.
During the period of intensified turnover within the industry, the company witnessed a notable surge in headcount, with an increase of more than 167,000 employees recorded between April 2020 and October 2023. However, this trend reversed in subsequent quarters as the company endeavored to mitigate elevated employee expenses.
Addressing concerns surrounding attrition and the erosion of trust among employees in IT firms, Subramaniam highlighted the significance of security and confidentiality.
In the third quarter, TCS saw its workforce shrink to 603,305 employees, marking a decline of 5,680 individuals. This reduction contrasts with the previous quarter’s decrease of 6,333, which represented the largest drop since the 2008 crisis, reflecting a deliberate slowdown in hiring initiatives by the company.
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As the company transitions towards a post-pandemic operational phase, there is an expectation that TCS will return to its “normal operating mode by the end of the current fiscal year,” as mentioned by Chief HR Officer Milind Lakkad during the earnings conference.
The process of reintegrating employees back into physical office spaces has emerged as a common challenge across the industry. TCS’s peers have also encountered similar hurdles in incentivizing employees to return to office premises. Many companies have adopted a roster system that necessitates employees to spend up to three days per week in the office, aiming to strike a balance between remote work and in-person collaboration.
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