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TCS Q1 Results: Consolidated Net Profit Up by 9% YoY, Announces Dividend of Rs. 10 Per Share

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Synopsis:

TCS reports strong Q1 FY2025 results with 5.4% YoY revenue growth, robust operating margin, significant headcount addition, and key partnerships. Major growth seen in manufacturing, India market, and AI/cloud initiatives.

Tata Consultancy Services Limited (BSE: 532540, NSE: TCS) announced its Q1 FY2025 financial results on July 11, 2024. The company reported a solid start to the fiscal year, demonstrating broad-based growth across various markets and verticals. Below are the consolidated highlights for Q1:

Consolidated Results Takeaways:

Revenue: TCS reported revenue of ₹62,613 crore, marking a 5.4% year-on-year (YoY) growth and 4.4% growth in constant currency (CC).

Operating Margin: The operating margin stood at 24.7%, an expansion of 1.5% YoY.

Net Income: The net income for the quarter was ₹12,040 crore, indicating an 8.7% YoY growth, with a net margin of 19.2%.

Net Cash from Operations: The net cash from operations amounted to ₹11,168 crore, which is 92.8% of the net income.

Workforce Addition: The net headcount addition was 5,452, bringing the total workforce strength to 606,998. The long-term attrition rate further decreased to 12.1%.

Dividend per share: TCS announced a dividend of ₹ 10.00 per share. The Record date would be 20/07/2024 and the payment date would be 05/08/2024.

Financial Results Summary:

Metrics

Q1 FY2025 (₹ crore)

Q1 FY2024 (₹ crore)

Growth

Revenue

62613

59381

5%

Profit Before Tax

16231

14989

8%

Profit After Tax

12040

11074

9%

Net Profit

12105

11120

9%

Key Segment Highlights

Growth by Industry Segments

  • Manufacturing: Led the growth with a 9.4% increase.
  • Energy, Resources & Utilities: Posted a 5.7% growth.
  • Life Sciences & Healthcare: Grew by 4.0%.
  • Regional Markets & Others: Exhibited a robust 37.7% growth.
  • Other verticals also showed sequential growth, contributing to the overall positive performance.

Growth by Markets

  • India: Showed a remarkable 61.8% YoY growth.
  • Asia Pacific: Grew by 7.6%.
  • Middle East & Africa: Posted an 8.5% growth.
  • UK: Experienced a 6.0% growth.
  • North America and Continental Europe showed marginal declines, but the overall growth was balanced by strong performances in other regions.

Key Growth Drivers:

  • Revenue Growth: ₹62,613 crore, 5.4% YoY growth.
  • Geographical Performance: Strong growth in India (61.8% YoY), UK, and Asia Pacific.
  • Industry Growth: Significant increases in Manufacturing (9.4%), Energy (5.7%), and Life Sciences (4.0%).
  • Tech Initiatives: Success in AI/Cloud services, Cyber Security, and IoT.
  • Operational Excellence: Operating margin at 24.7%, net cash from operations at ₹11,168 crore.
  • Human Resources: Added 5,452 employees, reduced attrition to 12.1%.
  • Strategic Partnerships: Collaborations with Xerox, IIT-Bombay, and Burgan Bank.
  • Recognition: Multiple global awards and accolades.
  • Innovation: Focus on AI, IoT, and digital transformation.

Explore: Tata Consultancy Serv Lt Share Price

Management Commentary

CEO and MD: K Krithivasan

K Krithivasan expressed his pleasure over the strong start to the fiscal year, highlighting the all-round growth across industries and markets. He emphasized TCS's continued expansion of client relationships, investments in emerging technologies, and innovation initiatives. Key projects included a new AI-focused TCS PacePort™ in France and an IoT lab in the US.

CFO: Samir Seksaria

Samir Seksaria highlighted the strong operating margin performance despite the annual wage increments. He attributed this success to TCS's focus on operational excellence and strategic investments in research, innovation, and talent.

Chief HR Officer: Milind Lakkad

Milind Lakkad discussed the successful completion of the annual increment process and the continued focus on employee engagement and development, resulting in industry-leading retention rates and strong business performance.

Significant Achievements and Initiatives

AI.Cloud and Cyber Security

AI.Cloud: TCS continued to see strong growth momentum, with over 270 AI/GenAI engagements in progress. The launch of TCS AI WisdomNext™ platform aggregates multiple GenAI services, facilitating rapid adoption of next-gen technologies.

Cyber Security: Saw strong growth, with clients prioritizing network security, identity and access management, and cloud security. TCS expanded its offerings and partnerships in these areas significantly.

Enterprise Solutions and IoT & Digital Engineering

Enterprise Solutions: Clients are investing in ERP modernization, supply chain optimization, and customer experience transformation, with GenAI being a major area of interest.

IoT & Digital Engineering: Growth driven by demand for digital transformation in connected plants, services, and industrial product engineering.

Cognitive Business Operations

TCS saw strong bookings led by large deals, reflecting robust demand for business process and infrastructure services. Key themes included operating model transformation, digitization of business processes, and vendor consolidation.

Key Highlights and Partnerships

  • Xerox: Partnership to develop a new agile, cloud-first operating model for Xerox.
  • IIT-Bombay Collaboration: Developing India's first Quantum Diamond Microchip Imager.
  • Bringing Life to ThingsTM Lab: Launched in Cincinnati to support rapid prototyping and implementation of AI, GenAI, and IoT engineering solutions.
  • Burgan Bank: Partnered to redefine customer experience and create a modern core banking solution using TCS BaNCSTM.

Awards and Recognition

TCS received numerous accolades in Q1 FY2025, including:

  • Kantar BrandZ: Named among the Top 50 brands in the Most Valuable Global Brands report.
  • LinkedIn: Ranked #1 in Top Companies to Work for in India 2024.
  • Forbes Spain: Named one of the 100 Best Companies to Work for in Spain for the second consecutive year.
  • Golden Bridge Awards: TCS North America won in two categories—Outstanding Employee Engagement Strategy and Diversity achievement.
  • Google Cloud Partner of the Year Awards: Recognized for Global Expansion, Data Management, and Talent Development.

Consolidated Financial Results:

Metrics

Q1 FY2025 (₹ crore)

Q1 FY2024 (₹ crore)

Year ended March 31, 2024 (₹ crore)

Revenue from operations

62613

59381

240893

Other income

962

1397

4422

Total income

63575

60778

245315

Employee benefit expenses

36416

35148

140131

Cost of equipment and software licences

2151

506

3702

Finance costs

173

163

778

Depreciation and amortisation expense

1220

1243

4985

Other expenses

7384

8729

32764

Total expenses

47344

45789

182360

Profit before exceptional item and tax

16231

14989

62955

Profit before tax

16231

14989

61997

Current tax

4290

3868

15864

Deferred tax

-164

1

34

Total tax expense

4126

3869

15898

Profit for the period

12105

11120

46099

 

Metrics

Q1 FY2025

Q1 FY2024

Year ended March 31, 2024

Earnings per equity share (Basic and diluted)

33.28

30.26

125.88

Dividend per share (Interim dividend)

10

9

45

Total dividend on equity shares

10

9

73

Conclusion

Tata Consultancy Services Limited has showcased a strong start to FY2025, with significant growth across various markets and industry segments. The company's focus on innovation, client relationships, and operational excellence continues to drive its success. With ongoing investments in AI, IoT, and digital engineering, TCS is well-positioned to maintain its leadership in the IT services sector. The TCS Share Price closed today at Rs. 3,902.00 down by 0.18%. 

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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