TCS Q2 Results: Profit Slips 5% On Exceptional Restructuring Charges; Margin Expands, Beats Estimates

Tata Consultancy Services Ltd. reported a 5.4% fall in net profit for the second quarter, due to exceptional restructuring expenses, while revenue advanced sequentially.

The consolidated bottom-line for the quarter ended September fell to Rs 12,075 crore from Rs 12,760 crore in the preceding quarter. Bloomberg had estimated the profit at Rs 12,568 crore. THis is due to the company recording an exceptional charges of Rs 1,135 crore, incurred as restructuring expenses. excluding the the exceptional charges, the profit stood at Rs 13,210 crore.

The IT major's revenue rose 3.7% sequentially to Rs 65,799 crore during the quarter under review, from Rs 63,437 crore in the April-June period. The analysts' consensus estimate tracked by Bloomberg was Rs 65,206 crore.

Overall, India's largest software services provider by market capitalisation had topped estimates during the three months ending September.

TCS Q2 Results Key Highlights (Consolidated, QoQ)

• Revenue up 3.7% at Rs 65,799 crore versus Rs 63,437 crore (Bloomberg estimate: Rs 65,206 crore).

• Profit down 5.4% at Rs 12,075 crore versus Rs 12,760 crore (Bloomberg estimate: Rs 12,568 crore).

• EBIT rises 7% to Rs 16,565 crore versus Rs 15,514 crore (Bloomberg estimate: Rs 15,998 crore).

• EBIT margin expands to 25.2% versus 24.45% (Bloomberg estimate: 24.53%).

The company's total contract value stood at $10 billion in the three months ending September, up from $9.4 billion in the preceding quarter.

"We are on a journey to become the world's largest AI-led technology services company," TCS Chief Executive Officer and Managing Director K Krithivasan said in a statement on Thursday.

The company applied for 9,226 patents, including 239 applied during the quarter, and has been granted 5,086 patents, including 147 granted during the quarter.

TCS Dividend

TCS has announced a second interim dividend of Rs 11 per equity share for the fiscal 2025. The company announced distribution of nearly Rs 3,980 crore to shareholders.

The board has fixed Oct. 15 as the record date for the purpose of dividend payment, the company said in an exchange filing on day. Additionally, the company said it will pay the interim dividend on Nov. 4.

TCS Share Price Today

The stock settled 1.14% higher at Rs 3,061.7 apiece on the NSE, compared to a 0.54% advance in the benchmark Nifty 50. The shares, earlier during the day, fell as much as 2.57% to Rs 338.7 per share.

TCS shares have fallen 29% in the last 12 months, and 26% on a year-to-date basis.

Thirty-two out of the 51 analysts tracking TCS have a 'buy' rating on the stock, 13 recommend a 'hold' and six suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets is Rs 3,541, which implies a potential upside of 17%.