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Tata Consultancy Services (TCS), a leading software exporter in India, reported a 5% year-on-year (YoY) increase in its consolidated net profit for the second quarter ended September 2024, reaching Rs 11,909 crore. This figure falls short of the Street's expectation of Rs 12,450 crore. The company's revenue from operations saw an 8% YoY growth, reaching Rs 64,259 crore.
The Board of Directors approved a second interim dividend of Rs 10 per share, payable on November 5. The record date for this dividend has been set for October 18. TCS attributed the cautious market trends observed in recent quarters to the prevailing uncertain geopolitical environment. Despite this, the company highlighted signs of recovery in its largest vertical, BFSI (Banking, Financial Services, and Insurance), and a strong performance in its Growth Markets.
In constant currency terms, the revenue growth for the June-September period was 5.5% YoY. The company's operating margin for the quarter stood at 24.1%, a slight decrease of 0.2% YoY. Key contributors to the growth during the quarter were the energy, resources, and utilities segment (7% growth) and the manufacturing sector (5.3% growth). The BFSI, consumer, and life sciences sectors saw marginal gains of 0.1% each, while tech and media services experienced a 10% decline in constant currency.
TCS emphasized its strategic investments in talent and infrastructure this quarter, aiming for sustainable growth. Samir Seksaria, CFO of TCS, highlighted the company's disciplined execution, resulting in superior cash conversion. They reassured investors that their long-term cost structures remain unchanged and that they are confident in their ability to continue delivering industry-leading profitable growth.
On a sequential basis, the net profit was down by a marginal 1% from Rs 12,040 crore in the previous quarter. Revenues, however, showed a 3% quarter-on-quarter (QoQ) increase. The LTM IT Services attrition rate for the September quarter was 12.3%. TCS added 11,000 associates in the first half of the year and confirmed their commitment to trainee onboarding as planned. Milind Lakkad, Chief HR Officer, highlighted their strong talent base and increased learning intensity, positioning the company for complex technology transformations entrusted by clients.
The company ended the second quarter with net cash of operations at Rs 11,932 crore. On Thursday, TCS shares closed 0.6% lower at Rs 4,227.9 on the National Stock Exchange (NSE). The results, despite missing estimates, signal a continued growth trajectory for TCS amidst a challenging global economic environment.
Source: TCS Q2 Results: Profit rises 5% YoY to Rs 11,909 crore, misses estimates