Aided by an all-round growth across various markets, Tata Consultancy Services (TCS) kicked off FY25 with an 8.72 per cent rise in net profit (attributable to shareholders of the company) at Rs 12,040 crore for the first quarter (Q1) ended June 2024 as against Rs 11,074 crore in the same period of last year. However, on a sequential basis, the net profit declined by 2.89 per cent from Rs 12,240 crore in the March 2024 quarter. With the domestic market leading the growth, India’s largest IT company posted a revenue at Rs 62,613 crore for the June 2024 quarter as against Rs 59,381 crore a year ago, a rise of 5.4 per cent. However, on a sequential basis, revenue rose by only 2.24 per cent from Rs 61,237 crore in the March quarter. The board of directors of TCS declared a dividend of 10 per cent. TCS said all major markets returned to sequential growth with very strong double-digit growth in emerging markets, led by India at 61.8 per cent on a year-on-year basis. Almost all verticals posted a sequential growth. The growth was led by manufacturing (9.4 per cent), energy, resources & utilities (5.7 per cent) and life sciences & healthcare (4.0 per cent). The operating margin was at 24.7 per cent, an expansion of 1.5 per cent on a year-on-year basis, TCS said. Revenue has gone up by 4.4 per cent in constant currency terms and net margin was at 19.2 per cent. The company reported a revenue growth of 3.9 per cent growth and 8.7 per cent rise in profit in dollar terms. TCS MD and CEO K Krithivasan said: “I am pleased to report a strong start to the new fiscal year with all-round growth across industries and markets. We are continuing to expand our client relationships, create new capabilities in emerging technologies and invest in innovation, including a new AI-focused TCS PacePort in France, IoT lab in the US and expanding our delivery centers in Latin America, Canada and Europe.” TCS shares closed 0.33 per cent higher at Rs 3,922.70 on the BSE on Thursday ahead of the results announcement. Samir Seksaria, Chief Financial Officer, said: “In spite of the usual impact of the annual wage increments in this quarter, we have delivered strong operating margin performance, validating our efforts towards operational excellence. We remain focused on making the right investments in R&I and talent, strengthening our superior return ratios and creating long term value for our stakeholders.” According to TCS, the total workforce strength was 606,998 with a net headcount addition of 5,452. Analysts said TCS first quarter results gave a mild surprise on the upside as sequential constant currency revenue growth of 2.2 per cent reflected an improving business environment in the US. “Large deals made in the last year seem to be getting converted into revenue along with the ramp-up of the BSNL deal. The lowering attrition and the net headcount addition is a major positive and augurs well for the company’s utilisation levels and subsequently its EBIT margin,” said Manish Chowdhury, Head of Research, StoxBox. “Despite wage hikes in the quarter TCS managed to report a beat on EBIT margin estimates. These positives are bound to lead to an upward revision in EPS estimates but not so much on the revenue side,” he said. Key monitorable factors going forward are updates on the BSNL deal ramp-up, medium-term industry demand trends and impact of macro headwinds on demand, deal wins and deal pipeline, revenue growth and margin outlook for FY25 and investments in GenAI partnerships, Chowdhury said.
