TCS Q2 Results 2024: Profit Rises 5% Despite Operating Margin Decline – Full Details Inside
Tata Consultancy Services (TCS) announced its financial results for the second quarter of the fiscal year 2024-25. The company reported a 5% increase in net profit, reaching ₹11,909 crore, compared to ₹11,342 crore in the same period last year. This growth comes amid ongoing global uncertainties and a slight decline in operating margins.
Main Points
Key Highlights from TCS Q2 Results
- Net Profit Growth: TCS’s consolidated net profit rose by 4.99% year-on-year (YoY) to ₹11,909 crore. However, this figure fell short of market expectations, which had projected profits around ₹12,450 crore.
- Revenue Increase: The company’s revenue from operations increased by 7.06% YoY, amounting to ₹64,988 crore. In constant currency terms, revenue grew by 5.5% during the quarter.
- Operating Margin Decline: TCS reported an operating margin of 24.1%, which reflects a decrease of 0.2% YoY. This decline is attributed to cautious client spending trends that have persisted over recent quarters.
- Dividend Announcement: The board of TCS declared a second interim dividend of ₹10 per share, scheduled for payment on November 5, 2024. The record date for this dividend is set for October 18, 2024.
- Sector Performance: The growth in revenue was primarily driven by the energy, resources, and utilities segment, which saw a 7% increase. The manufacturing sector also performed well with a growth of 5.3%. However, the technology and media services sectors faced challenges, experiencing a 10% decline in constant currency terms.
TCS Detailed Analysis
TCS’s performance reflects broader trends in the IT industry as it navigates through economic uncertainties and changing client demands. CEO K Krithivasan noted that despite geopolitical challenges, there are signs of recovery in their largest vertical, Banking, Financial Services, and Insurance (BFSI). He emphasized TCS’s commitment to enhancing its value proposition for clients and stakeholders during these turbulent times.
CFO Samir Seksaria highlighted that TCS made strategic investments in talent and infrastructure this quarter to ensure sustainable growth moving forward. He expressed confidence in TCS’s ability to maintain industry-leading profitable growth despite the current market conditions.
TCS Market Reactions
The results have sparked varied reactions among analysts and investors. While the profit rise is commendable, the miss on expectations has raised concerns about TCS’s ability to match the growth rates of competitors like Accenture, which has recently reported strong performance driven by generative AI projects.
TCS Future Outlook
Looking ahead, TCS aims to focus on demand recovery and capitalize on advancements in generative AI technology. The company remains optimistic about its long-term growth prospects despite current challenges in specific sectors.
Overall, TCS’s Q2 results illustrate both resilience and caution as it adapts to an evolving market landscape while continuing to drive profitability. Meta Description: Discover key highlights from TCS’s Q2 results for 2024, where profit rose 5% despite a decline in operating margins.
