TCS Q3 Review: Steady State Growth, Margins Are Yet To Be Seen, Says ICICI Securities
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ICICI Securities Report
Segments like regional markets (up 7.3% QoQ, constant currency), manufacturing (up 7.1%) and communications (up 5.5%), which did not fully recover in September 2020, led Tata Consultancy Services Ltd.’s Q3 growth.
Near term growth (H1 CY21) will be optically strong, courtesy -
1. low base effect (prior two years), and 2. ramp-up of captive/large deals.
However, as focus shifts from ‘recovery’ to ‘growth’, steady-state growth (Sep-21++) will be the key monitorable.
Sustainability of utilisation and offshore effort, seemingly at their peaks, is a big ask.
Reversal of some Covid-19 led savings, large deal ramp-ups and weaker U.S.dollar can upset street expectation of further margin expansion.
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