TCS Q2 Results Highlights: TCS declares Rs 10 dividend, Q2 net profit falls 1.1%, revenue up 2.6%

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TCS reports strong momentum in AI and generative AI adoption, highlighting that the underlying technology is maturing rapidly. The company has successfully deployed over 600 AI and GenAI engagements, either in production or at various stages of development.

TCS CFO Samir Seksaria says that the company has made strategic investments in talent and infrastructure to ensure sustainable growth. He also noted that the longer-term cost structures remain unchanged.

Tata Sons Pvt Ltd is set to earn approximately Rs 2,600 crore in dividend income from its shareholding in Tata Consultancy Services (TCS), India’s largest IT services exporter.

As of the June 2024 quarter, Tata Sons held a 71.74% stake, equivalent to 259 crore shares, according to stock exchange filings. Tata Investment Corporation also held a 0.03% stake in the company during this period. More details here

Tata Consultancy Services (TCS) reported a net headcount increase of 5,726 employees in the second quarter of FY25, following a similar rise of 5,452 in Q1. This marks two consecutive quarters of growth after three-quarters of decline. TCS's total workforce now stands at 6,12,724.

Chief Human Resources Officer Milind Lakkad stated, "We welcomed 11,000 associates in the first half of the year and remain on track for trainee onboarding. Campus hiring for FY26 has also commenced." More, here

TCS CEO K. Krithivasan noted that the cautious trends observed over the last few quarters continued in Q2, influenced by ongoing geopolitical uncertainty. However, the Banking, Financial Services, and Insurance (BFSI) sector showed signs of recovery. He also highlighted a strong performance in TCS's growth markets.

Tata Consultancy Services (TCS) has announced an interim dividend of Rs 10 per share. The company reported dollar revenue of $7.67 billion for Q2, reflecting a 2.2% growth quarter-on-quarter.

Tata Consultancy Services (TCS) reported an increase in its attrition rate for Q2, which rose to 12.3% from 12.1% in the previous quarter. The company also added 5,726 employees to its workforce, slightly higher than the net headcount addition of 5,452 in Q1.

Tata Consultancy Services (TCS) reported its financial results for the second quarter, with net profit declining by 1.1% quarter-on-quarter (QoQ) to Rs 11,909 crore, compared to Rs 12,040 crore in the previous quarter.

However, the company's rupee revenue saw a 2.6% QoQ increase, rising to Rs 64,259 crore from Rs 62,613 crore. TCS also reported a slight uptick in EBIT, which increased by 0.1% to Rs 15,465 crore, compared to Rs 15,442 crore in Q1.

The EBIT margin, however, saw a dip, standing at 24.1%, down from 24.7% in the previous quarter.

Tata Consultancy Services (TCS) announced its financial results for the second quarter, posting a net profit of Rs 11,909 crore. The company's revenue stood at Rs 64,219 crore. TCS reported an EBIT of Rs 15,465 crore, with margins at 24.1%.

TCS and Accenture are the two IT giants that have been consistently reporting their generative AI (Gen AI) pipeline numbers. Despite current market headwinds, Gen AI remains a bright spot, with customers reallocating tech budgets for early experimentation and proof of concepts (PoCs).

Accenture ended FY24 with $3 billion in Gen AI order inflows and $900 million in revenue, a significant leap from the $300 million in order inflows and $100 million in revenue reported in FY23. In Q4 alone, Accenture secured $1 billion in new Gen AI bookings.

As Accenture CEO Julie Sweet stated during the company’s Q4 FY24 earnings conference last month, the current environment remains cautious and largely unchanged. "Clients are entering their budgeting season now, so we'll have a clearer picture in January and February. However, there hasn't been much of a shift; the macroeconomic landscape is still consistent," she noted.

Notably, most of the contracts are centered around digital and business transformation, diverging from the previously expected trends of efficiency-focused cost-cutting and vendor consolidation. This shift raises hopes that transformation projects are making a comeback and that clients are increasing their technology spending.

In Q1, TCS's management anticipated broad-based traction across various verticals for new deals. As Q2 unfolds, analysts expect the company to report several large deals sequentially and a strengthened order book. This quarter's deal wins have been predominantly in the retail sector, including significant contracts with Primark, McDonald's, and Croma.

A portion of TCS's revenue growth in Q2 is anticipated to stem from the ongoing execution of the BSNL deal. Analysts at JM Financial estimate that this deal will generate an incremental revenue contribution of approximately $75 million, further propelling growth in the regional markets segment, which includes India.

TCS's EBIT margin is anticipated to remain flat at 24.7% sequentially. ICICI Securities projects a potential margin expansion of about 50 basis points, citing the absence of Q1 wage hikes and maximum use of subcontracting. Conversely, Motilal Oswal forecasts a slight decline in margins, attributing it to the ramp-up of the BSNL deal and investments in talent development and training.

As per a Moneycontrol poll of 10 brokerages, TCS’ revenue is projected to grow by 2.1% sequentially and 7.1% year-on-year (YoY), reaching Rs 63,938 crore. Profit after tax (PAT) is expected to rise 3.2% sequentially and 9.5% YoY.

For TCS, attention will center on demand recovery and advancements in the generative AI (Gen AI) sector, as it faces scrutiny against rival Accenture, which has recently experienced robust growth and increased interest in Gen AI initiatives.

Tata Consultancy Services (TCS), India's largest software exporter, is set to kickstart the IT industry's earnings season with its second-quarter results today. As we navigate through global macroeconomic uncertainties, the IT sector is expected to showcase a period of steady recovery.

Stay tuned as we bring you live updates, key insights, and expert analysis on TCS' Q2 performance!