Tata Consultancy Services (TCS) Q1 FY25, though meeting estimates, continued to show the impact of an uncertain macroeconomic environment.
For Q1 FY25, TCS net profit grew 8.7 per cent year-on-year at Rs 12,040 crore. Profits were down 3.1 per cent sequentially. Revenue for the quarter came in at Rs 62,613 crore, up 5.4 per cent year-on-year and 2.2 per cent sequentially.
TCS’s Q1 performance exceeded Bloomberg estimates on revenue and net profit. Bloomberg had estimated revenue to be Rs 62,128 crore and profit at Rs 11,959 crore.
Margins for the quarter came in at 24.7 per cent, an expansion of 1.5 per cent year-on-year.
The TCVs generally give a sense of demand. In Q4 FY24, TCS had signed TCVs worth $13.2 billion, the highest ever over the last four to five quarters.
K Krithivasan, chief executive officer and managing director, said: “I am pleased to report a strong start to the new financial 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, an IoT lab in the US and expanding our delivery centres in Latin America, Canada, and Europe.”
The growth driver for the first quarter for TCS was emerging markets, led by India, which grew 61.8 per cent year-on-year, primarily due to the BSNL deal, followed by the UK at 6 per cent. The US continued to be subdued. For Q1 FY25, North America was down 1.1 per cent and Continental Europe was flat with a growth of 0.9 per cent. However, the company said that all major markets are back to sequential growth.
When it came to verticals, banking, finance, and insurance, which is the largest vertical for the company, continued to be soft, down 0.9 per cent year-on-year. The consumer business, technology and services, and communications and media sectors were also down, with a decrease of 7.4 per cent. Manufacturing drove demand by growing 9.4 per cent year-on-year.
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.”
TCS’s workforce stood at 606,998 as of June 30. TCS also announced a net headcount addition of 5,452. This comes after two to three quarters of negative headcount. IT services attrition came in at 12.1 per cent.
Milind Lakkad, chief human resources officer, said: “I am delighted to announce the successful completion of our annual increment process. 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.”
First Published: Jul 11 2024 | 4:19 PM IST
