TCS Q4 Results: Net Profit Slips 1.7% to ₹12,224 Crore, Misses Estimates Amid Global Uncertainties
India's largest IT services provider, Tata Consultancy Services (TCS), reported a 1.7% decline in net profit for the fourth quarter of fiscal year 2024-25, falling short of market expectations amid rising global uncertainty and project delays. The Q4 results, announced on Thursday, mark the beginning of the earnings season for Indian corporates.
Key Financial Highlights
For Q4 FY25, TCS posted a net profit of ₹12,224 crore, down from ₹12,434 crore in the same period last year. This performance missed the market estimates of ₹12,766 crore. Revenue for the quarter grew 5.2% year-on-year to ₹64,479 crore, slightly below the projected ₹64,848 crore. Sequential revenue growth was marginal at 0.79%.
For the complete financial year 2024-25, TCS achieved:
- Net profit of ₹48,553 crore, up 5.8% year-on-year
- Revenue of ₹255,342 crore, reflecting 6% growth
- Crossed the $30 billion revenue milestone for the first time
Operating Performance
The company's operating margins for the quarter stood at 24.3%, down 30 basis points sequentially. Despite the challenging environment, TCS reported a strong order book with total contract value (TCV) at $12.2 billion for Q4, compared to $10.2 billion in Q3. This represents the second-highest quarterly TCV in the company's history.
For the full fiscal year, TCS secured deals worth $39.4 billion, demonstrating its continued ability to win large contracts despite market headwinds.
Global Performance and Market Challenges
TCS Managing Director and CEO K Krithivasan acknowledged that market sentiment had not improved as expected due to ongoing discussions around US tariffs, which led to delays in decision-making and project ramp-ups related to discretionary investments.
Regional performance was mixed across markets:
- West Asia & Africa: Grew 13.2% year-on-year
- Asia Pacific: Grew 6.4% year-on-year
- Latin America: Grew 4.3% year-on-year
- North America: Declined 1.9% year-on-year
- UK: Grew 1.2% year-on-year
- Continental Europe: Grew 1.4% year-on-year
India, which had been a key growth driver in previous quarters, saw a significant sequential decline of 13.2% as the initial phase of the BSNL deal approaches completion in Q1 FY26. However, on a year-on-year basis, the India market still registered 33% growth.
Sectoral Performance
Among industry verticals, performance was varied:
- BFSI (Banking, Financial Services, and Insurance): Grew 2.5% year-on-year and 1.3% quarter-on-quarter
- Energy, Resources and Utilities: Grew 4.6% year-on-year
- Technology & Services: Grew 1.1% year-on-year
- Consumer Business: Declined 0.2% year-on-year and 0.7% sequentially
- Life Sciences & Healthcare: Contracted 0.8% quarter-on-quarter
- Manufacturing: Contracted 0.5% quarter-on-quarter
AI-Led Growth and Future Outlook
TCS reported strong demand in artificial intelligence (AI) and generative AI-led deals, with over 580 AI for business engagements delivered during the quarter. The company believes that AI adoption will continue to drive growth opportunities across various sectors.
Despite short-term uncertainties, management remains optimistic about FY26, projecting better performance than FY25. "No region would want to continue with such global uncertainty for a very long period of time. I believe some certainty will emerge soon," Krithivasan stated during the earnings call.
Dividend Announcement
TCS announced a final dividend of ₹30 per share for Q4 FY25, bringing the total dividend for the fiscal year to ₹126 per share, significantly higher than the ₹73 per share declared in FY24. The total dividend payout for FY25 amounts to ₹45,612 crore, compared to ₹26,426 crore in the previous year.
The dividend will be paid after the company's annual general meeting scheduled for late May 2025. Tata Sons, which holds a 71.7% stake in TCS, will receive approximately ₹32,722 crore as gross dividend for FY25.
Market Impact
The Q4 results were announced after market hours on Thursday. Investors and market analysts will closely watch how the stock reacts when trading resumes. The company's performance, particularly the decline in net profit and the impact of global uncertainties on its operations, may influence market sentiment toward the entire IT sector, which has been facing headwinds due to delayed discretionary spending by clients.
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