TCS kicks off earnings season by declaring dividend and matching analyst's muted expectations

• The IT bellwether has declared an interim dividend of ₹9 per share.
• Company reports growth of 16.8% in net profit and a 12.5% rise in revenue from operations.
• Operating margin has taken a 130 bps hit compared to the previous quarter.

Tata Consultancy Services (TCS), has kickstarted the earnings season by releasing its June quarter results. The largest software services exporter in India reported a growth of 16.8% to ₹11,074 crore in net profit and a 12.5% rise in revenue from operations, beating analyst estimates, which were anyway muted for the first quarter.

The consolidated revenue increased nearly 13% year-on-year to Rs 59,381 crore. The reported numbers for the quarter are in-line with expectations and have slightly topped it as well. This is because analysts expectations were muted due to a tough quarter globally.

EBIT or operating profit during the April-June quarter stood at ₹13,755 crore, registering a decline of 5% from ₹14,488 crore in the preceding March quarter. The company's operating margin decreased from 24.5% in Q4FY23 to 23.2% in Q1FY24, a 130 basis point decline.

The company's total contract value ,or TCV, stood at $10.2 billion and this does not include the recent BSNL order. This, analysts say augers well for the IT giant. A deeper dive shows that when compared to the last quarter of the financial year gone by, the BFSI segment grew 0.2%, communication was down 1%, life sciences and healthcare was up 0.8%, retail went up 1.1% and manufacturing went up 1.5%.

Dividend declared

The TCS board has declared an interim dividend of ₹9 per share.

"The interim dividend shall be paid on Monday, August 7, 2023, to the equity shareholders of the Company, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Thursday, July 20, 2023, which is the Record Date, fixed for the purpose," TCS said in a regulatory filing to the stock exchanges.

The company's top leadership have expressed satisfaction with the first quarter's performance with the CEO and MD. K Krithivasan, mentioning the deal wins.

“It is very satisfying to start the new fiscal year with a string of marquee deal wins. We remain confident in the longer-term demand for our services, driven by the emergence of newer technologies. We are investing early in building capabilities at scale on these new technologies, and in research and innovation, so we can maximize our participation in these opportunities,” he said.

N Ganapathy Subramaniam, the Chief Operating Officer said the company was proactively building differentiating capabilities in generative AI and actively working on such projects.