Tata Consultancy Services (TCS) announced its April-June quarter results for fiscal 2024-25 (FY25) on Thursday, July 11, showcasing an impressive performance with an 8.7% rise in consolidated net profit at ₹12,040 crore, compared to ₹11,074 crore in the corresponding period last year. The revenue from operations during the June quarter of the current fiscal rose by 5.4% to ₹63,613 crore, compared to ₹59,381 crore in the same period last year.

Starting the new financial year on a strong note, India's largest IT major reported a healthy 9% year-on-year (YoY) rise in Q1 FY25 net profit, which aligned broadly with market expectations. The company surpassed market expectations on several parameters, including the return to sequential growth across all major markets and almost all verticals during the quarter.

The company's CEO and MD, K Krithivasan, stated: “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.”

TCS highlighted that clients are prioritizing initiatives to make their products and services smarter, thereby uplifting productivity through next-generation technology levers like GenAI, IoT, and others. The key deal win themes included operating model transformation, vendor consolidation, legacy modernization, M&A, customer experience, digital workplace services, ER&D, identity and access management, and AI/GenAI initiatives. The company noted that AI, Cloud, Cyber Security, and Enterprise Solutions led the growth this quarter.

The board of directors at TCS announced an interim dividend of ₹10 per equity share, with the record date for dividend payment being July 20, 2024, and the dividends set to be paid out on 5 August 2024.

Key Numbers

TCS reported an 8.72% YoY rise in consolidated net profit to ₹12,040 crore for Q1 FY25, compared to ₹11,074 crore in the same quarter last year.

Sequentially, the company's profit declined by 3.2% from ₹12,434 crore in Q4 FY24.

The overall revenue from operations for the quarter stood at ₹62,613 crore, rising 5.4% YoY from ₹59,381 crore in Q1 FY24.

Sequentially, the company's revenue rose 2.2%.

In constant currency (CC) terms, the company registered a 4.4% YoY growth in revenue.

The operating margin expanded by 1.5% YoY to 24.7%.

Growth in Key Domains

Among the key domains, the "regional markets and others" segment saw a YoY growth of 37.7% in constant currency terms, followed by manufacturing (up 9.4% YoY in CC terms), "energy, resources and utilities" (up 5.7%), and "life sciences and healthcare" (up 4% YoY). Conversely, the "communication and media" domain contracted by 7.4% YoY, followed by "technology and services" (down 3.9%), BFSI (down 0.9%), and the consumer business segment (down 0.3%).

Performance of Key Markets

Barring the North American market, which saw a degrowth of 1.1% YoY in constant currency terms, all major markets across geographies experienced growth during the quarter. The growth was led by India, which saw a strong 61.8% YoY growth, followed by MEA (8.5%), Asia Pacific (7.6%), Latin America (6.3%), and the UK (6%).

Overall, TCS's strong Q1 performance highlights its robust market positioning and ability to navigate various industry challenges while continuing to invest in emerging technologies and expanding its global footprint. Investors and market analysts will be watching closely to see how the company leverages these results to drive further growth in the upcoming quarters.

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