Tata Consultancy Services (TCS) saw a positive surge in its share price following the release of its Q1FY25 earnings report and the announcement of an interim dividend. On Friday, TCS shares opened at ₹3,980 on the National Stock Exchange (NSE) and rose 2.55% to ₹4,023.9 by mid-morning.
Key Takeaways from TCS Q1FY25 Earnings:
- Revenue and Profit Growth: TCS reported a 5.4% year-on-year (YoY) increase in revenue to ₹62,613 crore, up from ₹59,381 crore in Q1FY24. Sequentially, revenue grew 2.2% from ₹61,237 crore in Q4FY24. The company’s consolidated profit after tax (PAT) rose 8.7% to ₹12,040 crore, despite a 3.1% decline from the previous quarter.
- Market Performance: Major markets have returned to sequential growth, with India contributing 61.8% to emerging markets’ revenue growth. Asia Pacific markets saw a 7.6% YoY increase, while Latin America contributed 6.3% growth. However, North American market revenue declined by 1.1% YoY.
- Sector Performance: Manufacturing showed the highest YoY growth at 9.4%, followed by Energy, Resources, and Utilities at 5.7%. Conversely, sectors like Technology and Services, BFSI, consumer business, and communication and media experienced revenue declines.
- Operating Metrics: TCS’s operating margin stood at 24.7%, with a net margin of 19.2%. The company reported a net headcount addition of 5,452 employees, bringing the total workforce to 606,998. The attrition rate was reported at 12.1%.
- Dividend Announcement: The Board of Directors declared an interim dividend of ₹10 per share, scheduled for payment on August 5, 2024, with a record date of July 20.
Management Commentary: CEO K Krithivasan expressed satisfaction with the strong start to the fiscal year, highlighting growth across industries and markets. He emphasized TCS’s focus on expanding client relationships and investing in emerging technologies, including a new AI-focused TCS PacePort in France and an IoT lab in the US.
CFO Samir Seksaria noted the company’s strong operating margin despite higher wages in Q1FY25. He reiterated TCS’s commitment to operational excellence and strategic investments in research and innovation.
TCS Share Price Reaction: Ahead of the Q1FY25 results, TCS shares had slipped 2.15% over the past five days, indicating a cautious sentiment among investors. However, the positive earnings report and dividend announcement spurred a 2.5% rise in share price, reflecting renewed investor confidence.
