TCS Grows Despite Headwinds: Revenue Rises, Net Profit Climbs 2%

12 Jan 2024 , 10:23 AM

The biggest provider of IT services in India, Tata Consultancy Services (TCS), declared a net profit of Rs 11,058 crore for the quarter that ended on December 31, 2023, on January 11. This is an increase of 2% from Rs 10,846 crore for the same period the previous year. Despite significant furloughs in the tech and BFSI industries and a persistent downturn in discretionary spending, there was a slight increase.

On a consecutive quarter basis, net profit decreased by 2.5%.

According to TCS, in an exchange statement, consolidated revenue increased 4% YoY to Rs 60,583 crore in the three months ending December 31 from Rs 58,229 crore the previous year.

The operating margin, also known as the EBIT margin, increased to 25% from 24.3% in the prior quarter.

The TCS board also approved a special dividend of Rs 18 for the fiscal year 2023–2024 in addition to a payout of Rs 27 per share.

‘Our strong performance in a seasonally weak quarter buffeted by macro-economic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer centric strategy,’ stated K Krithivasan, Chief Executive Officer and Managing Director, in response to the performance.

Strong deal momentum is being observed in all markets, and this has led to a healthy order book that shows our long-term growth. We are spearheading our clients’ innovation and exploratory efforts in this space since we are witnessing enormous interest in generative AI,’ he continued.

The total contract value (TCV) of the deals disclosed by TCS was $8.1 billion, a decrease from $11.2 billion in the prior quarter. Additionally, this is less than TCS’s $9–10 billion quarterly guidance range.

‘We saw significant progress in many projects of national importance during the quarter, demonstrating our execution strength,’ stated N Ganapathy Subramaniam, Chief Operating Officer and Executive Director. We had a successful quarter with new wins and go-lives for our products and platforms.

‘Record transaction volumes are being processed by the MCX infrastructure, which is scaling smoothly. The rollout of the BSNL 4G/5G network is proceeding as planned. With our AI playground platform, we are effectively upskilling our staff in generative AI,’ he continued.

TCS experienced a drop in headcount for the second straight quarter. In Q3, the headcount decreased by 5,680.

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