TCS Q4 results: Profit rises 9% to Rs 12,434 crore, revenue up 3.5%

Indian IT services major Tata Consultancy Services (TCS) reported a 9.14% year-on-year (YoY) increase in consolidated net profit at Rs 12,434 crore for the March quarter, compared to Rs 11,392 crore in the same quarter last year. Analysts had expected the largest software exporter to achieve a 5-6% YoY increase in net profit.

TCS stated that its consolidated sales for the quarter grew 3.5% YoY to Rs 61,237 crore from Rs 59,162 crore in the same quarter last year. Analysts were anticipating a 3-4% sales increase. Sequentially, sales growth in constant currency terms was 2.2%.

K Krithivasan, Chief Executive Officer and Managing Director expressed, “We are very pleased to close Q4 and FY24 on a strong note with the highest ever order book and a 26% operating margin, validating the robustness of our business model and execution excellence. In an environment of global macro uncertainty, we are staying close to our customers and helping them execute their core priorities with TCS’ portfolio of offerings, innovation capabilities, and thought leadership.”

Read more: TCS bags 15-year deal from UK-based insurance company Aviva

The EBIT margin came in at 24.6%, up 150 basis points YoY. Analysts had expected a 30-50 basis points expansion in sequential margins. Deal wins at $13.2 billion exceeded analyst estimates of $8-10 billion for the quarter.

TCS declared a final dividend of Rs 28 per share for the financial year 2023-24. Along with the Rs 45 per share dividend announced earlier, the total TCS dividend for FY24 was Rs 73 per share. The dividend would be paid on the fourth day after TCS' upcoming 29th Annual General Meeting (AGM).

Regarding geographies, growth was led by India, the UK, and the US. Manufacturing, healthcare, energy, resources, and utilities were the key verticals driving growth for the IT major. Other verticals that contributed to growth included Cloud Migration and Modernization, GenAI, Enterprise application services, Identity & Access Management, Connected Devices, Digital Workplace Services, Network Services, and Vendor Consolidation. The company expressed optimism about AI, Cloud, Enterprise Solutions, IOT, and Cyber Security, which it believes drove growth in the quarter.

Read more: TCS to help UK’s Co-operative Group move its IT systems to the cloud

N Ganapathy Subramaniam, Chief Operating Officer, and Executive Director, stated that TCS' Q4 performance was robust, with broad-based deal wins across industries and geographies. "Our products and platforms business sparkled with the mega-deal win at Aviva, and emerging markets had another stellar growth quarter demonstrating the power of TCS’ diversified portfolio,” he said.

TCS reported a headcount of 601,546 at the end of FY24. Milind Lakkad, Chief HR Officer, stated, “We are pleased to announce the annual increments for our workforce, as we have consistently done every year, with top performers receiving double-digit hikes. The reduced attrition at 12.5%, enthusiastic response to our campus hiring, increased customer visits, and employees returning to the office have resulted in great vibrancy in our delivery centers and elevated morale of our associates."

Samir Seksaria, Chief Financial Officer, commented on FY24, “In FY 2024, our disciplined approach to operations has helped us expand our industry-leading margins. In a challenging environment, we persisted with our long-term investments in workforce reskilling, research, and innovation. We will continue to drive efficiencies and competitiveness to capture opportunities for growth with profitability.”

Biswajit Maity, Sr Principal Analyst at Gartner, mentioned, “As anticipated, TCS demonstrated strong momentum with a year-over-year increase in profit percentage. TCS holds a significant role among the top players in the IT services market, primarily due to its customer-centric ethos."

According to him, TCS’s greatest strength is its customer-centricity. TCS invests in developing deep, trusting, and long-standing relationships with its clients. This takes time but yields TCS the ability to sell into customer C-suites. TCS also displays flexibility in relationships and negotiates fairly with clients during challenging times, through change requests and contract renewals. This is largely enabled due to its customer-centricity that enables flexibility and also its efficient account management. Collectively, these attributes have influenced TCS’s positive growth trajectory.

However, Maity noted that as TCS targets large deals, it needs to closely monitor its services to ensure that the substantial increase in workload does not adversely affect the overall quality of service promised to its clients.”

With TCS kicking off the earnings season for tech companies, it will be followed by Infosys on April 18 and Wipro on April 19. Tech Mahindra is scheduled to announce Q4 and full-year numbers on April 25, whereas HCL Technologies will declare its numbers on April 26.