Bengaluru: Tata Consultancy Services (TCS), India's largest software services exporter, reported a 5% year-on-year increase in net profit to ₹11,909 crore for the second quarter. This growth was primarily driven by a significant ₹15,000-crore deal with Bharat Sanchar Nigam Ltd (BSNL), despite cautious technology spending from clients in America and Europe.
CEO K Krithivasan noted signs of improvement in financial services in North America, while emphasizing a cautious demand outlook. He indicated that macroeconomic stability and easing interest rates could lead to increased consumer and industry confidence, potentially enhancing investment in the second half of FY25.
TCS's consolidated revenue reached ₹64,259 crore, up 7.6% year-on-year and 2.6% sequentially. The BSNL deal significantly boosted sales in India by 95%, while North American sales declined by 2.1%.
The company announced a second interim dividend of ₹10 per equity share, payable on November 5. TCS shares closed marginally lower at ₹4,228.40, while the Sensex rose by 0.2%. Over the past three months, TCS shares have increased by 8%.
TCS continues to expand its AI and GenAI initiatives, with a reported pipeline growth from $900 million to $1.5 billion in the last quarter. The company added three large clients, increasing the number of clients contributing over $100 million to revenue from 63 to 66.
Despite a decrease in margins to 24.1%, TCS's order book slightly increased to $8.6 billion. Key growth sectors included energy, resources, and utilities, as well as manufacturing, with strong performance in markets like India, the Middle East, and Africa.
Market sentiment around IT has improved following Accenture's increased FY25 guidance and the US Federal Reserve's recent interest rate cut. Upcoming earnings reports from HCLTech, Infosys, and Wipro are anticipated as signs of recovery in hiring and demand emerge.