TCS Q2 Results: IT Behemoth Earns Rs 11,909 Crore Net Profit In Q1FY25, Misses Estimates; Revenue Up 8% YoY

Tata Consultancy Services (TCS), India's largest IT company in terms of market cap, missed its estimates during the September 2024 quarter. The late Ratan Tata-backed TCS earned a consolidated net profit of Rs 11,909 crore in Q1FY25, registering growth of 5% YoY. On the top-line front, revenue climbed 8% YoY to Rs 64,259 crore.

The tech player had earned net profit of Rs 11,380 crore and revenue of Rs 59,692 crore in September 2023 quarter.

However, the latest PAT declined marginally from a net profit of Rs 12,105 crore reported in the June 2024 quarter. On a quarter-on-quarter basis, revenue climbed as against Rs 62,613 crore witnessed in Q1FY25.

K Krithivasan, Chief Executive Officer and Managing Director said: "We saw the cautious trends of the last few quarters continue to play out in this quarter as well. Amidst an uncertain geopolitical situation, our biggest vertical, BFSI showed signs of recovery."

The CEO added, "We also saw a strong performance in our Growth Markets. We stay focused on sharpening our value proposition to our clients, employees and other stakeholders."

In constant currency, the revenue growth came in at 5.5% YoY in the quarter under review. On segment-wise performance, IN Q2FY25, CC growth in BFSI was marginal 0.1%, which was also the case in life sciences & healthcare, and consumer business compared to Q2FY24. Strong growth emerged in Energy, Resources and Utilities segment with CC revenue growth of 7%, followed by CC growth of 5.3% in manufacturing business.

However, the laggards of the September 2024 quarter for TCS were - Communication & Media whose CC revenue declined by 10.3% YoY, followed by a drop of 1.9% in Technology & Services.

On a geographical basis, constant currency revenue growth was robust in India by 95.2%. However, trends in North America continued to be under pressure, with CC revenue falling by 2.1% YoY in Q2FY25. Continental Europe and the UK recorded CC revenue growth of 1.8% YoY and 4.6% YoY respectively. Other regions that improved CC revenue growth are - Middle East & Africa (+7.9%), Asia Pacific (+7.5%), Latin America (+6.8%)

Furthermore, TCS posted an operating margin of 24.1% in the latest quarter, down by 0.2% YoY. While net margins came in at 18.5%.

Notably, TCS bagged net cash from operations to the tune of Rs 11,932 crore, which is, 100% of net profit in the quarter.

Samir Seksaria, Chief Financial Officer, said: "We made strategic investments this quarter in talent and infrastructure to ensure sustainable growth. Our disciplined execution resulted in superior cash conversion. Our longer-term cost structures remain unchanged, and we remain confident in our ability to continue delivering industry-leading profitable growth".

On BSE, TCS share price ended at Rs 4228.40 apiece, down by 0.6% with a market cap of Rs 15,29,872.13 crore.

TCS' second quarter earnings for FY25 are announced after the demise of philanthropic icon Ratan Tata. Due to the last rites of Ratan Tata earlier on Thursday, TCS cancelled its press conference scheduled at 5.30 pm.

A part of the Tata Group, India's largest multinational business group, TCS has over 601,000 of the world's best-trained consultants in 55 countries. The company generated consolidated revenues of US $29 billion in the fiscal year ended March 31, 2024, and is listed on the BSE and the NSE in India.