TCS posts 12% rise in net profit for third quarter of FY25

Tata Consultancy Services (TCS), India’s largest technology services company, registered a 12% annual rise in net profit for the three month period between October and December 2024 and signalled a softer demand environment at least in the short term.

TCS reported a net profit of Rs 12,380 crore for the third quarter of 2024-25 fiscal. The revenues during this period came in at Rs 63,973 crore which was a 5.6% year-on-year (YoY) increase.

Speaking about the third quarter performance, TCS CEO K Krithivasan said the demand environment continues to be soft, which is a continuation from what the company saw in the second quarter of the fiscal.

This was reflected in the 1.7% quarter-on-quarter revenue growth decline for the company. In the second quarter of FY25, the revenue was Rs 64,259 crore.

However, the TCS CEO expressed optimism in the medium term going by its order book, or the total contract value (TCV), which stood at $10.2 billion at the end of the third quarter.

According to the CEO, there have been early signs of recovery in the discretionary spends and this has been noticeable in the BFSI segment of North America. “We expect 2025 to be a better year than 2024,” he remarked.

For the third fiscal, TCS continued to see challenges from its key market of North America, which saw a 2.3% YoY decline. There was flattish growth from its largest business segment - BFSI.

The operating profit margin for TCS during the third quarter stood at 24.5%, which was 50 basis points lower when compared to the similar period of last fiscal. However, on a sequential basis, the margins went up by 40 basis points.

TCS Chief Financial Officer Samir Seksaria said, “In a quarter that saw significant cross-currency volatility, TCS’s strong execution, cost management and deft currency risk management helped deliver healthy margin improvement and free cash flows. Disciplined investments in talent and infrastructure should lend good support to long-term business growth.”

At the same time, TCS did not have positive news on the human resources front as its employee strength at the end of third quarter was down by 5,370 people. The headcount at the end of third quarter was 607,354, as compared to 612,724 at the end of second quarter of the fiscal.

This decline in headcount comes after two quarters of steady increase in employee numbers. The company said it is on track to hire 40,000 freshers for the current fiscal, and this number is expected to increase in the next fiscal.

TCS also announced a dividend of Rs 76 per share, which includes Rs 66 as a special dividend.