Tata Consultancy Services Ltd. shares will be in focus on Friday after the information technology company reported its results for the first quarter of FY27, with revenue broadly in line with Street expectations, while profit and operating margin declined from the previous quarter. The company also announced an interim dividend of Rs 12 per share.
The company's consolidated net profit fell 2.7% quarter-on-quarter to Rs 13,349 crore from Rs 13,718 crore in the March quarter. Revenue from operations rose 2.2% sequentially to Rs 72,275 crore, compared with Rs 70,698 crore in the preceding quarter.
Operating profit, measured by earnings before interest and tax (EBIT), declined 3.1% from the previous quarter to Rs 17,317 crore from Rs 17,870 crore. EBIT margin narrowed 130 basis points to 24% from 25.3% in the March quarter.
The results indicate that while TCS continued to expand revenue during the June quarter, profitability came under pressure. The company also maintained a workforce of nearly 5.94 lakh employees and reported a higher attrition rate during the period.
TCS Q1 Result Highlights (Consolidated, QoQ)
- Net profit down 2.7% to Rs 13,349 crore versus Rs 13,718 crore.
- Revenue up 2.2% to Rs 72,275 crore versus Rs 70,698 crore.
- Ebit down 3.1% to Rs 17,317 crore versus Rs 17,870 crore.
- Margin at 24% versus 25.3%.
ALSO READ: TCS Q1 Review: Brokerages Split; Jefferies Sees 25% Downside, JPMorgan, Kotak Stay Bullish
The company's workforce stood at 593,798 at the end of the June quarter. Last-12-month attrition in its IT services business was 13.6%.
TCS declared an interim dividend of Rs 12 per equity share. The record date for determining eligible shareholders is July 15, while the dividend will be paid on July 31.
Management Cites Deal Wins, AI demand
Commenting on the quarterly performance, Chief Executive Officer and Managing Director K Krithivasan said, "Q1FY27 reflects continued growth momentum and the strength of our strategic positioning, despite geopolitical and macro-economic headwinds. We delivered a strong order book of $9.5 billion, including a marquee AI-led transformation deal with SKF, while continuing to add clients across key revenue bands and scaling our AI business to a $2.6 billion annualised revenue run rate."
He added, "As customers accelerate investments in AI, modernisation, cybersecurity, sovereign cloud and platform simplification, our strong deal conversion, improving client mining and expanding ecosystem partnerships position TCS well to translate opportunity into sustained growth."
ALSO READ: TCS Says It's Still Hiring Freshers — But There's A Catch
Banking, Regional Markets Support Growth
TCS reported constant-currency revenue growth of 0.4% quarter-on-quarter and 3.2% year-on-year during the June quarter.
Banking, financial services and insurance, which contributed 32.1% of revenue, grew 1.6% sequentially and 2.4% from a year earlier. Technology and Services, accounting for 8.5% of revenue, rose 1.7% quarter-on-quarter and 3.5% year-on-year.
Regional Markets and Others was the fastest-growing business segment, posting 4% sequential growth and 9% year-on-year growth. The segment contributed 13.3% of total revenue.
Energy, Resources and Utilities recorded 6.9% year-on-year growth despite a 0.7% sequential decline. Life Sciences and Healthcare, along with Manufacturing, posted year-on-year growth of 3.5% and 2.9%, respectively, but both businesses declined from the previous quarter.
ALSO READ: TCS' Hiring Message Changed In Just One Year. Here's What Happened
Consumer Business was the weakest-performing segment, with revenue falling 4% quarter-on-quarter and 1.2% year-on-year. The segment accounted for 15% of total revenue. Communication and Media remained largely unchanged, reporting 0.3% sequential growth and 1.4% year-on-year growth.
TCS shares closed 0.52% lower at Rs 2,047.75 on Thursday, while the BSE Sensex ended 0.31% higher at 76,741.82.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.