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PremiumTCS Q2 Results Highlights: Tata Consultancy Services (TCS), the largest IT services company in India, announced its financial results for the second quarter of FY25 today, reporting a rise of five per cent in net profit to ₹11,909 crore on realisations from large deals signed in the previous quarters. The Tata Group company said its board of directors also declared an interim dividend of ₹10 per share.
The operating profit margin narrowed to 24.1 per cent, down 0.2 per cent from the year-ago period and 0.6 per cent from the April-June quarter. TCS's overall employee base increased by 5,726 to 6,12,724 staffers, and the net addition in the first half of the current fiscal year was over 11,000. Manufacturing, which accounts for less than 9 per cent of the revenues, was among the fastest growing at 5.3 per cent.
Stay tuned to our TCS Q2 Results LIVE blog for the latest updates.
“The Q2FY25 result of TCS fell short of expectations, with margins contracting. Despite the above-estimated top-line growth, the margins continued to get pressurised, likely due to their deep dive into the talent pool. The offset expected from the deferment in wage hike didn’t come through. While the discretionary spending was impacted in the quarter, Cybersecurity, AI, cloud, and TCS Interactive continued to grow," said Sagar Shetty, Research Analyst, StoxBox
“Win themes across key deals involved vendor consolidation, managed services, UX transformation, technology simplification, legacy modernization, enterprise network transformation, automation and GenAI initiatives. The company saw a steady revival in its BFSI vertical, and growth markets displayed a solid performance. With the expected rate cut in the US in the upcoming months, we expect a rise in discretionary spending, further improving the company’s revenue visibility," said Shetty.
“The key things to consider going ahead would be the management plans to achieve its margin guidance of 26-28 per cent in FY25 and the likely shape up of net headcount addition in the coming quarters. The company’s outlook on its order book and demand environment would also be key factors," he added.
TCS sealed several deals in the Sept quarter. Here are some of the major ones:
--TCS expanded partnership with Rolls-Royce, a British multinational specializing in civil aerospace, defense aerospace, services and power systems, to advance its sustainable initiatives and involves research into hydrogen fuel system technology.
--Follett Higher Education, North America’s leading college store operator, selected TCS to strengthen its information technology infrastructure and cybersecurity services.
--George Yang-led Golden Arches Development Corporation (GADC), the master franchise holder of McDonald's in the Philippines selected TCS to standardize and digitize the IT operations for its 760+ restaurants.
--Openreach, the UK’s largest telecom infrastructure company, has selected TCS as its strategic partner for the business operation transformation of their national roll-out of next-gen fibre networks.
During this quarter, we saw multiple large wins across IT Infrastructure and business operations with robust TCV closure powered by Cognix led operating model transformation. Key trends witnessed were vendor consolidation, employee experience enhancement, workplace transformation, network reimagination and first-time outsourcing. Good traction in business process services, with Banking, Insurance, Cards and Supply Chain operations doing well.
TCS sees continued momentum in AI/GenAI adoption, with the underlying technology gaining maturity at a very rapid pace. Over 600 AI/GenAI engagements are now deployed successfully in production or in various phases of development.
“Our customers are increasingly concentrating on integrating AI throughout their entire enterprise value chain, rather than working on isolated use cases. We are also enabling AI/GenAI capabilities across our suite of product and solutions. We are continuing to deepen our skillsets across our workforce through platforms like AI Experience Zone and TCS WisdomNextTM. On Cloud front, we continue to see good growth in Legacy Modernization, Data Platform Modernization and Technology Landscape Simplificatio," said TCS.
TCS said its clients continue to up their spend on improving their security posture. “Our offerings aimed at security guardrails for AI/GenAI adoption are seeing good traction. Governance, Risk & Compliance (GRC), Vulnerability Management, Identity and Access Management and Cloud Security were top areas of growth. We are also seeing traction for Security Operations transformation, Ransomware resiliency and Secure GenAI," said the IT major.
Revenue from the banking, financial services and insurance segment (BFSI) rose 0.1b per cent from a year earlier, as some of the deals signed in previous quarters began contributing to the company's top line. Other top verticals such as consumer and life sciences too reported marginal growth. As of 30th September 2024, TCS had applied for 8,354 patents, including 160 applied during the quarter, and been granted 4,369 patents including 223 granted during the quarter.
TCS is seeing continued momentum in the AI/GenAI adoption, with the underlying technology gaining maturity at a very rapid pace. The company said that cyber security will add to its revenue as it believes clients will continue to up their spending on improving their security posture.
BSNLs ₹15,000 crore deal involving setting up data centers and 4G sites across India and laying the foundation for future 5G infrastructure for BSNL will be a fillip for the company in the coming quarters, as per the company.
Workforce strength: 612,724 | Net Headcount addition of 5,726
• Diverse and inclusive workplace: Women in the workforce: 35.5 per cent |150 Nationalities
• LTM IT Services attrition rate at 12.3 per cent
H1’FY25 Net Headcount Addition of more than 11,000 employees
Milind Lakkad, Chief HR Officer, said: “We welcomed 11,000 associates in the first half of the year, and we remain on track for trainee onboarding as planned. We have also commenced the campus hiring process for FY26. Our strong talent base and increased learning intensity prepares us well for the complex technology transformations that customers entrust us with".
Growth led by Energy, Resources and Utilities (+7.0 per cent), Manufacturing (+5.3 per cent)
- All the Growth Markets march above company average: India (+95.2 per cent), Middle East & Africa (+7.9 per cent), Asia Pacific (+7.5 per cent), Latin America (+6.8 per cent)
- Operating Margin at 24.1 per cent; Net Margin at 18.5 per cent
Net Income at ₹11,909 crore, +5.0 per cent YoY | Net Margin at 18.5 per cent
• Net Cash from Operations at ₹11,932 crore ie 100.2 per cent of Net Income
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."
“This is in furtherance to our letter no. TCS/SE/143/2024-25 dated September 30, 2024. We hereby inform you that the press conference for Q2FY2025 scheduled to be held at 5:30 PM (IST) on Thursday, October 10, 2024, stands cancelled," said TCS in a statement.
TCS will also host an Earnings conference call at 19:00 hrs IST (21:30 hrs SST/HKT, 13:30 hrs UTC, 09:30 hrs US ET), during which the leadership team will discuss financial performance and take questions.
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. 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".
Tata Consultancy Services' revenues rose 7.06 per cent to ₹64,988 crore from ₹60,698 crore in the year-ago period, and were marginally higher compared to ₹63,575 crore in the preceding quarter.
TCS net profit rises five per cent to ₹11,909 crore in the July-September quarter
Shares of TCS settled 0.56 per cent lower at ₹4,228.40 apiece on the BSE.
TCS Q2 Results LIVE: TCS share price gave up day’s gains to trade around half a percent lower on Thursday afternoon. TCS share price opened at ₹4,248.05 apiece on the BSE as against its previous close of ₹4,252.30, and reached intraday high of ₹4,293.30, gaining nearly a percent over previous close. TCS shares hit intraday low of ₹4,200 apiece. TCS stock was trading 0.64% lower at ₹4,225.00 apiece at 3 PM.
TCS Q2 Results LIVE: Key focus in TCS Q2 results would be on Europe outlook, which remains challenging despite multiple mega deal wins over the past year. Investors will also focus on outlook in financial services vertical and any loss of share to insourcing at large clients, state of spending in UK and Europe market and signs of improvement in demand, pipeline of deals, state of discretionary spending and what would it take to revive the same, impact of GCC ramp-up on growth of companies and levers to defend and increase margins.
TCS Q2 Results LIVE: ICICI Securities expects broad based traction across verticals, especially from retail verticals. However, TCS saw a higher number of large deal announcements in Q2 (>2x of Q1FY25). We saw increased traction in retail vertical for TCS (coming from deals like Primark, Mc Donald's and Croma), continuing the sequential growth in the vertical from last two quarters. It expects TCS EBIT margin to see QoQ expansion of ~50 bps in absence of wage hikes from Q1FY25. Subcontracting lever usage has already been maximised, said the brokerage firm.
Emkay Global builds in a 2.2% QoQ USD revenue growth after factoring in 100 bps cross currency tailwinds. It is building an incremental 0.8% QoQ contribution from the BSNL deal. EBIT margin is likely to remain flattish QoQ due to adverse revenue mix with BSNL driving bulk of incremental revenue and muted growth in international market.
TCS Q2 Results LIVE: TCS Q2 revenue growth to be led by ramping up of deals in BFSI, Retail and BSNL deal. EBIT margin expected to show slight improvement sequentially. Management commentary on the demand environment would be a key thing to watch out for, said Centrum Broking.
TCS Q2 Results LIVE: We expect $55 million QoQ incremental contribution from BSNL. TCS revenues would remain stable in the rest of the business due to challenges in Europe offset by some improvement in US BFSI. We forecast 30 bps QoQ increase in EBIT margin due to Rupee depreciation. Headwinds for the quarter are lower utilization rates and shift of revenue mix toward the lower margin BSNL contract. Note that Q1 margins included 35 bps one-time impact from electoral trust contribution. We expect $10 billion of deal wins which is a decline from the September 2023 quarter. Note that previous year TCV numbers had mega-deals with high renewal components, said Kotak Institutional Equities.
TCS Q2 Results LIVE: TCS dividend expected to be announced today will be the second dividend for the financial year 2024-2025. The Tata Group company earlier paid an interim dividend of ₹10 per share. The record date for the first interim dividend for FY25 was July 19.
In FY24, TCS distributed a total dividend payout of ₹46,223 crore to its shareholders. In April 2024, the company announced a final dividend of ₹28 per share for the fiscal year. This was in addition to an interim dividend of ₹9 per share and a special dividend of ₹18 per share issued earlier in the year.
TCS had also declared interim dividends of ₹9 per share in both the first and second quarters. Furthermore, the IT giant conducted a share buyback program worth ₹17,000 crore during FY24. In FY23, TCS paid a total of ₹115 per share dividend, worth ₹33,306 crore.
TCS Q2 Results LIVE: TCS stock is building a base around its 100-day EMA (Exponential Moving Average), supported by positive divergence. The immediate and critical hurdle is at ₹4,400, aligning with the 50-day MA. A breakout above ₹4,400 could propel the stock towards the ₹4,500 and ₹4,600 levels. On the downside, ₹4,200, which coincides with the 100-day MA and the highest put OI (Open Interest) base, serves as strong support. Only a breach below ₹4,200 may signal weakness, with the next target being the 200-day MA at ₹4,050, said Santosh Meena, Head of Research at Swastika Investmart.
TCS Q2 Results LIVE: We expect CC revenue growth of 0.9% with 80 bps cross currency tailwind translating into 1.6% QoQ USD revenue growth. We estimate $75 million incremental contribution from BSNL deal; ex-regional markets (where BSNL is housed), we expect 0.7% USD revenue growth for TCS (flat in cc). Softer growth in developed market and lower margin profile of BSNL will be key margin headwinds, resulting in flat margin, JM Financial said.
TCS Q2 Results LIVE: Going forward, focus would be on Europe outlook, which remains challenging despite multiple mega deal wins over the past year. Investor would also focus on TCS’ outlook in financial services vertical and any loss of share to insourcing at large clients, state of spending in UK & Europe market and signs of improvement in demand, pipeline of deals, state of discretionary spending and what would it take to revive the same, impact of GCC ramp-up on growth of companies and levers to defend and increase margins.
TCS Q2 Results LIVE: TCS is expected to report a modest financial performance for Q2FY25 today. While the growth numbers remain in single digits, the market will closely monitor the company’s outlook. Key areas of focus include the health of the financial services vertical, client spending in the UK and Europe, demand recovery, and the impact of insourcing by large clients. Additionally, attention will be on the deals pipeline, discretionary spending, and TCS's ability to defend and expand its margins amidst global uncertainties. All eyes are on TCS’s guidance for the coming quarters, especially in light of GCC ramp-ups and the ongoing challenges in the macroeconomic environment," said Anshul Jain, Head of Research at Lakshmisgree Investment and Securities.
TCS Q2 Results LIVE: TCS Q2 EBIT margins are likely to be watched out for as softer growth in developed markets and lower margin profile of BSNL deal will be key headwinds. Thus, while MOFSL estimates EBIT margin to decline by 20 bps, ICICI Securities expects margin to expand by 49 bps QoQ in absence of wage hikes. The depreciation in Indian rupee is also expected to act as a tailwind for margins.
TCS Q2 Results LIVE: TCS share price traded higher on Thursday ahead of the announcement of Q2 results today. TCS stock price opened marginally lower at ₹4,248.05 apiece on October 10 as against previous close of ₹4,252.30 per share on BSE. TCS shares hit an intraday high of ₹4,290.20 apiece.
TCS stock price has fallen over 5% in one month, but gained over 7% in six months. TCS share price has risen more than 12% year-to-date (YTD) and 17% in the past one year.
TCS stock hit a 52-week high of ₹4,585.90 per share on September 2, 2024, and touched a 52-week low of ₹3,313.00 apiece on November 1, 2023. It was trading 0.30% higher at ₹4,264.90 apiece.
TCS Q2 Results LIVE: TCS Q2 net profit is expected to rise 3.5% to ₹12,461 crore from ₹12,040 crore, QoQ. At the operational level, TCS earnings before interest and taxes (EBIT) in Q2FY25 is estimated to grow 3.1% to ₹15,916 crore from ₹15,442 crore, QoQ.
TCS Q2 Results LIVE: TCS Q2 revenue growth in Constant Currency (CC) terms is projected to be around 1.2% QoQ led by pick up in US BFSI project ramp ups and the ongoing BSNL deal. Analysts estimate around $75 million incremental contribution from BSNL deal.
TCS Q2 Results LIVE: The IT bellwether TCS is expected to post muted earnings growth in the June-September quarter of FY25 led by ramp-up of key deals, especially the BSNL one. TCS Q2 revenue is expected to grow 2.2% to ₹64,011 crore from ₹62,613 crore in the previous quarter, according to a poll of six brokerages. Revenue in USD terms is likely to increase 2% to $7,648 million from $7,505, quarter-on-quarter (QoQ).
TCS Q2 Results LIVE: TCS board will also consider declaration of a second interim dividend to the equity shareholders today. The company has fixed October 18 as the record date for the dividend.
“The second interim dividend, if declared, shall be paid to the equity shareholders of the Company whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Friday, October 18, 2024, which is the Record Date fixed for the purpose," TCS said.
TCS dividend to be announced today will be the second dividend for the financial year 2024-2025.
TCS Q2 Results LIVE: The meeting of the Board of Directors of Tata Consultancy Services Ltd is scheduled to be held on Thursday, October 10, 2024, inter alia to approve and take on record the audited condensed standalone financial results of the Company under Indian Accounting Standards (Ind AS) for the quarter and six month period ending September 30, 2024, TCS said in a regulatory filing on September 30.
The Tata Group company’s board will approve and take on record the audited condensed consolidated financial results of the Company and its subsidiaries, it added.
TCS Q2 Results LIVE: Tata Consultancy Services (TCS), the largest IT services company in India, will declare its financial results for the second quarter of FY25 today. TCS Q2 results date is October 10 and the IT giant will announce its September quarter earnings after the market hours today.
