TCS' net profit grows 2% YoY in Q3, strong growth in revenues
TCS put up a credible performance for the third quarter of FY24, generating Rs 11,058 crore in net profit, despite a challenging business environment.
Tata Consultancy Services (), India’s largest IT services exporter, continued with its steady performance for the third quarter of the current fiscal with its net profit growing by 2% year-on-year (YoY) while its revenue grew by 4%, topping the estimates of the markets.
The net profit for Q3 FY24 stood at Rs 11,058 crore, and if one excludes the legal settlement claim of $125 million in relation to a trade secrets lawsuit filed by US-based Epic Systems, this number would have risen by 8%.
The pleasant surprise was the revenue growth rate as the market was estimating it to be around 1.5% in US dollar terms and it reported a 2.9% growth.
TCS CEO K Krithivasan said, “Our strong performance in a seasonally weak quarter buffeted by macroeconomic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer-centric strategy. We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth.”
Even the operating profit margins of TCS for the third quarter saw a marginal improvement of 0.5% to come in at 25%. The company said the total contract value of large deals at the end of the quarter stood at $8.1 billion, indicating continued steady revenue growth in the coming quarters.
However, the TCS CEO emphasised that the ground-level situation had not changed much in terms of the macroeconomic environment as the market continues to remain cautious.
TCS recorded a relatively upbeat performance in Q3 FY24 despite some of its largest revenue-generating geographies like North America and the highest business vertical BFSI showing a decline in business in this period.
According to TCS, among the international markets, the United Kingdom led with 8.1% growth and continental Europe grew 0.5%. In emerging markets, India led with 23.4% growth, Middle East and Africa grew 16.0%, Latin America grew 13.2%, and the Asia-Pacific grew 3.9%.
In terms of business verticals, energy, resources and utilities saw the highest growth at 11.8%, followed by manufacturing at 7%.
However, things have not been positive on the human resources front as TCS saw a decline in its overall employee count. At the end of the third quarter, the total headcount stood at 603,305, which is a drop of 10,669 in the span of a year.
On the buzz surrounding generative artificial intelligence (GenAI), TCS said there is growing interest among its customers in implementing this technology with four of its projects moving from testing phase to pilot projects. TCS Chief Operating Officer N Ganapathy Subramaniam said the overall development of GenAI is moving to a situation where people are getting comfortable about this technology and are willing to try out new things, adding that the possibilities were enormous.
Edited by Kanishk Singh