TCS Q1 Results: Starting the new financial year on a healthy note, Indian IT bellwether Tata Consultancy Services (TCS) on Thursday, July 11, reported a healthy 9 per cent year-on-year (YoY) rise in Q1FY25 net profit, which was broadly in line with market expectations.
On some parameters, the company exceeded market expectations. For example, it said all major markets and almost all verticals returned to sequential growth during the quarter.
The company's chief executive officer (CEO) and managing director (MD), 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 centres in Latin America, Canada and Europe.”
The company said clients prioritised initiatives that make their products and services smarter, uplifting productivity while transcending the next-generation technology levers like GenAI, IoT, and others.
"Win themes across key deals involved operating model transformation, vendor consolidation, legacy modernization, M&A, customer experience, digital workplace services, ER&D, Identity and access management and AI/GenAI initiatives. AI.Cloud, Cyber Security and Enterprise Solutions led the growth this quarter," TCS said in its media statement.
The company's board of directors announced an interim dividend of ₹10 per equity share. The record date for dividend payment is July 20, 2024, and dividends will be paid out on 5 August 2024.
Let's take a look at five key highlights of TCS' Q1FY25 scorecard:
The company reported an 8.72 per cent YoY rise in its consolidated net profit to ₹12,040 crore for the April-June quarter of fiscal 2025. In the same quarter last year, the company's profit was ₹11,074 crore.
However, sequentially, or on a quarter-on-quarter (QoQ) basis, the company's profit declined 3.2 per cent from ₹12,434 crore in Q4FY24.
Overall revenue from operations for the quarter stood at ₹62,613 crore, rising 5.4 per cent YoY from ₹59,381 crore in Q1FY24. Sequentially, the company's revenue rose 2.2 per cent. In constant currency (CC) terms, the company registered a 4.4 per cent YoY growth in revenue.
Operating margin expanded 1.5 per cent YoY to come at 24.7 per cent.
“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,” said Samir Seksaria, chief financial officer of TCS.
Among the key domains, "regional markets and others" saw a YoY growth of 37.7 per cent in constant currency (CC) terms. It was followed by manufacturing (up 9.4 per cent YoY in CC terms), "energy, resources and utilities" (up 5.7 per cent), and "life sciences and healthcare" (up 4 per cent YoY).
"Communication and media" domain contracted 7.4 per cent YoY, followed by "technology and services (-3.9 per cent), BFSI (-0.9 per cent) and consumer business (-0.3 per cent).
Barring the North American market, which saw a degrowth of 1.1 per cent YoY on CC terms, all major markets across geographies grew during the quarter.
The growth was led by India, which saw a strong 61.8 per cent YoY growth, followed by MEA (8.5 per cent), Asia Pacific (7.6 per cent), Latin America (6.3 per cent) and UK (6 per cent).
(i) TCS expanded its partnership with Xerox to develop a new agile, cloud-first operating model to fast-track the evolution of the company to a simplified, services-led, software-enabled organisation.
(ii) TCS collaborated with IIT-Bombay to develop India’s first Quantum Diamond Microchip Imager.
(iii) It was selected by a leading American provider of higher educational services and products for Infrastructure Managed Services.
(iv) Selected by a leading commercial bank in Kuwait- Burgan Bank- to create a modern core banking solution that strengthens its position.
(v) Set up a Global Artificial Intelligence (AI) Center of Excellence in Paris, which will focus on the brain-machine interface, developing empathy in machines and unleashing the creativity of AI.
(vi) Entered into a strategic partnership with a leading American home improvement retailer to establish a next-generation technology and data architecture landscape to transform into an AI-ready enterprise.
According to the company's BSE filing, its workforce stood at 6,06,998 as on June 30, 2024.
At the end of Q1FY25, the company's IT services’ attrition was at 12.1 per cent for the last twelve months.
It was slightly better than the last quarter. At the end of the March quarter (Q4FY24), TCS's IT services’ attrition was at 12.5 per cent for the last twelve months.
“Our continued focus on employee engagement and development led to industry-leading retention and strong business performance, with the net headcount addition being a matter of immense satisfaction,” said Milind Lakkad, Chief HR Officer, TCS.
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