TCS Q2 FY25 Results: Tata group IT giant kicks off earnings season; profit down 1% sequentially, misses Street expectations

TCS Q2 FY25 Results: Mumbai-headquartered Tata Consultancy Services (TCS)—the country's largest IT firm—on Thursday reported a consolidated net profit of Rs 11,909 crore for the quarter ended September 30, marking a decline of 1.1 per cent compared with the previous three months. The Tata group IT major's net profit fell short of analysts' expectations. Its revenue, however, stood at a better-than-expected Rs 64,259 crore for the second quarter of FY25, as against Rs 62,613 crore for the April-June period. TCS said its stable quarterly show "demonstrates the resilience of its diversified portfolio" while its growth markets outperformed the company average, with India at 95.2 per cent, Middle East and Africa at 7.9 per cent, Asia Pacific at 7.5 per cent, and Latin America at 6.8 per cent. 

The software exporter's revenue exceeded analysts' expectations, however, its net profit failed to meet the mark. According to Zee Business research, TCS was estimated to register a net profit of Rs 12,475 crore over revenue of Rs 63,920 crore for the July-September period.

“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," said K Krithivasan, Chief Executive Officer and Managing Director, TCS. 

"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," Krithivasan added. 

The IT bellwether's operating margin shrank by 60 basis points (bps) sequentially to 24.1 per cent, TCS said in a press release.

Zee Business analysts had estimated the IT firm's quarterly margin at 24.7 per cent. 

“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," said Samir Seksaria, Chief Financial Officer, TCS. 

IT services attrition at the company, on a trailing 12-month basis, stood at 12.3 per cent in Q2, higher than 12.1 per cent in Q1. TCS registered a net addition of 5,726 in its headcount during the quarter, taking its total workforce strength to 6,12,724, as of September 30. 

TCS declared a dividend of Rs 10 per equity share with the record and payment dates of October 18 and November 5, respectively.

Earlier on Thursday, TCS shares ended 0.6 per cent lower at Rs 4,228.4 apiece on BSE. As of October 9, TCS shares had risen 17 per cent in the past year, underperforming rallies of 28 per cent and almost 32 per cent in the Nifty50 and Nifty IT indices. 

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