- TCS reported a 16.8% increase in net profit in Q1FY24.
- Consolidated revenue grew by 13% YoY, reaching Rs 59,381 crore.
- Sequential growth was modest at 0.4%, the slowest in 12 quarters.
- EBIT margin declined to 23.2% due to wage hikes.
- TCS remains confident in long-term demand and is investing in new technologies.
Mumbai, July 12, 2023: Tata Consultancy Services (TCS), India’s largest software services exporter, has announced its financial results for the first quarter ended June 30, 2023. The company reported a net profit of Rs 11,074 crore, marking a 16.8% increase compared to the same period last year. However, the net profit declined by 3% sequentially from the previous quarter.
TCS witnessed a year-on-year surge of 13% in consolidated revenue, reaching Rs 59,381 crore. In constant currency terms, the revenue grew by 7% year-on-year. In dollar terms, the revenue increased by 4% from the previous quarter, amounting to $7,226 million.
Despite a challenging business environment, TCS experienced a modest growth rate of 0.4% sequentially, which represents the slowest growth in the last 12 quarters. The company attributed this to a weak demand environment.
TCS’s order book at the end of Q1FY24 stood at $10.2 billion, with a book-to-bill ratio of 1.4, slightly higher than the previous quarter. The company’s CEO, K Krithivasan, expressed confidence in the long-term demand for their services, citing the emergence of new technologies as a driving force. TCS remains focused on investing in capabilities at scale in these new technologies and in research and innovation.
The EBIT margin or operating margin declined to 23.2% from 24.49% in the previous quarter due to wage hikes implemented on April 1.
TCS witnessed growth across various industries it caters to, with the life sciences and healthcare sector leading at 10.1% growth. Manufacturing grew by 9.4%, BFSI by 3%, retail and CPG by 5.3%, technology and services by 4.4%, and communications and media by 0.5%.
Geographically, the United Kingdom exhibited the highest growth at 16.1%, followed by North America at 4.6% and Continental Europe at 3.4%. Among emerging markets, the Middle East and Africa grew by 15.2%, India by 14%, Latin America by 13.5%, and Asia Pacific by 4.7%.
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In a regulatory filing, TCS announced an interim dividend of Rs 9 per share. Despite the Q1 results being in line with muted estimates, the company’s stock price on the BSE experienced a slight decline, before the results were announced. It is to be seen how market reacts tomorrow.
In my opinion, TCS reported steady growth in net profit and revenue, while acknowledging the challenges posed by the current business environment. The company remains optimistic about the future, with a focus on new technologies and differentiating capabilities to drive further success.
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