Tata Consultancy Services (TCS) has announced its financial results for the second quarter of the fiscal year 2024, reporting a net profit of ₹11,909 crore. This figure came in below market expectations, which were set at ₹12,422 crore, as per a CNBC-TV18 poll. However, TCS’s revenue for the quarter stood at ₹64,219 crore, which was marginally above the estimated ₹64,160 crore.
Key Highlights:
- Net Profit: ₹11,909 crore, below the expected ₹12,422 crore
- Revenue: ₹64,219 crore, in line with the estimated ₹64,160 crore
- Operating Margin: 24.3%, reflecting some operational pressures on profitability
- Dividend: Declared a second interim dividend of ₹10 per equity share
- Earnings Per Share (EPS): ₹32.39, down from ₹34.63 year-on-year.
TCS attributed the modest performance to several factors, including increasing operational costs and global economic headwinds. The company’s constant currency revenue growth was recorded at 2.8% quarter-on-quarter, indicating steady progress but slower than expected.
Performance Insights:
The Q2 results come at a time when TCS is navigating a challenging global economic environment, which has seen volatility in demand for tech services, particularly in key markets like North America and Europe. Despite these challenges, TCS managed to keep its revenue growth stable, reflecting its diversified service offerings across verticals such as BFSI (Banking, Financial Services, and Insurance), retail, and healthcare.
During the earnings announcement, TCS leadership emphasized the company’s focus on enhancing its digital capabilities and expanding into emerging markets. Rajesh Gopinathan, CEO of TCS, noted that the company remains committed to its long-term growth strategy, investing in new technologies such as artificial intelligence, cloud computing, and cybersecurity.
Operating Margins and Dividend:
The operating margin for the quarter was 24.3%, which reflects some pressure from rising costs and wage hikes. Despite this, the board of directors declared a second interim dividend of ₹10 per equity share, reaffirming the company’s commitment to rewarding shareholders.
Sectoral and Geographic Growth:
TCS saw steady demand across various sectors, including BFSI and healthcare, though growth in these sectors was tempered by macroeconomic uncertainties. The North American market, which is a key revenue driver for the company, saw slower growth compared to previous quarters. Europe, too, presented challenges due to ongoing geopolitical tensions and economic uncertainties.
“We observed the cautious trends of the past few quarters continuing this quarter as well. Despite the ongoing uncertain geopolitical situation, our largest sector, BFSI, showed signs of recovery. We also had a strong performance in our growth markets. Our focus remains on refining the value we offer to clients, employees, and stakeholders,” said Samir Seksaria, Chief Financial Officer.
He added, “We made strategic investments this quarter in talent and infrastructure to ensure continued growth. Through disciplined execution, we achieved strong cash conversion. Our long-term cost structures are steady, and we are confident in our ability to continue delivering profitable growth.”
“We welcomed 11,000 new associates in the first half of the year and are on track with our trainee onboarding as planned. We’ve also started the campus hiring process for FY26. Our strong talent pool and focus on continuous learning position us well for the complex technology transformations our clients rely on us for,” said Milind Lakkad, Chief HR Officer.
