The company reported a net profit of Rs 11,058 crore in the year-ago period and Rs 11,909 crore for the preceding September quarter. The company’s revenue grew 5.6 per cent to Rs 63,973 crore against Rs 60,583 crore in the year-ago period
Mumbai: India’s largest IT services company Tata Consultancy Services (TCS) on Thursday reported an 11.95 per cent jump in its December quarter net profit to Rs 12,380 crore.
The Tata Group company had reported a net profit of Rs 11,058 crore in the year-ago period and Rs 11,909 crore for the preceding September quarter.
The company’s revenue grew 5.6 per cent to Rs 63,973 crore against Rs 60,583 crore in the year-ago period. However, it was down from Rs 64,259 crore in the September quarter.
New order bookings stood at USD 10.2 billion against USD 7.9 billion in the year-ago, in what is generally called a seasonally challenging quarter due to the holiday season.
Its chief executive K Krithivasan said the macro factors afflicting the IT sector continued even in the reporting quarter but added that the new orders were across industries, geographies, and service lines, which lends a “good visibility to long-term growth”.
There are also early signs of a revival in discretionary spending, which have been elusive for a better part of the fiscal and are among the factors leading to the softer revenue growth of 4.6 per cent in the first nine months Krithivasan said discretionary spending was likely to increase from now and added that the calendar year 2025 would be better than 2024.
He told reporters that from a revenue perspective, Q3 saw negative growth across all the major geographies, but it was emerging markets that helped. Revenues from India grew 70 per cent, and the home country now accounts for over 9 per cent of the overall revenue pie.
Krithivasan said the BSNL deal, which had been supporting Indian revenues for the past few quarters, reached its peak and would taper off faster but exuded confidence that its global business will help make up for the dip. A significant part of the revenue contribution for India business comes from BSNL in Q3, but from a growth perspective, other sectors or clients have delivered better, he said, adding that some of the revenue from India was seasonal in nature.
He said banking, financial services, and insurance, along with consumer business, were returning to growth, contributing new order wins of USD 3.2 billion and USD 1.3 billion, respectively. The company also reported some setbacks on the top-billing clients during the quarter, which were attributed to a divestiture in one of the clients, a planned slowdown in spending by another, and currency fluctuations.
The operating profit margin came at 24.5 per cent, the same as last year, but up from 24.1 per cent in the quarter-ago period. Chief Financial Officer Samir Seksaria attributed the margin expansion to efficiency gains and added that it will continue to pursue the same to get number into the 26-28 per cent aspirational area.
The overall workforce was reduced by over 5,000 employees during the three months, and the overall base stood at 6.07 lakh as of December this year. The IT services attrition inched up to 13 per cent. Chief human resources officer Milind Lakkad said the workforce was reduced due to various factors, including higher utilisation and also productivity gains.
Krithivasan played down fears like generative artificial intelligence impacting jobs, saying the new technology will add to jobs on a net basis, though the profiles may be different. Gen AI is part of all the large deals now and occupies up to 10-12 per cent of the entire work, the CEO said.
Lakkad said the campus hiring was going according to plan of doing 40,000 in FY25, and the company was preparing to hire more than that number next year.
The company board announced a dividend of Rs 76 per share, including a special dividend of Rs 66 per share in what will be an over Rs 21,500 crore payout. The company also announced the acquisition of a land bank in Bengaluru from a Tata group company for Rs 1,625 crore.
“TCS Q1 reported mixed results with slightly larger than expected revenue decline in a seasonally soft quarter while margins have shown an uptick with improving deal wins,” analysts at Mirae Asset Sharekhan said. TCS scrip closed 1.72 per cent down at Rs 4,036.65 apiece on the BSE on Thursday against a 0.68 per cent correction on the benchmark.
