logo
TCS Q1 net profit rises 6% to ₹12,760 crore; board declares interim dividend of ₹11 per share

TCS Q1 net profit rises 6% to ₹12,760 crore; board declares interim dividend of ₹11 per share

The Hindu10-07-2025
In the backdrop of global uncertainties and geopolitical issues impacting businesses, Tata Consultancy Services Ltd. (TCS) reported 6% growth in net profit at ₹12,760 crore over the year ago period aided by one time gain of ₹600 crore for the first quarter of 2025-26 ending June 30.
Revenue at ₹63,437 crore for the quarter, grew 1.3% Year on Year (YoY). However, the revenue declined 3.1% YoY in constant currency. Operating margin at 24.5% has seen an expansion of 30 bps quarter on quarter (QoQ). The net margin during the quarter was 20.1% . Net cash from operations at ₹12,804 crore was 100.3% of the net income during the quarter.
The board has announced an interim dividend of ₹11 per share. Record date of dividend is July 16 and payment date is August 4.
K. Krithivasan, Chief Executive Officer and Managing Director of TCS, said: 'The continued global macro-economic and geo-political uncertainties caused a demand contraction. On the positive side, all the new services grew well. We saw robust deal closures this quarter. We remain closely connected to our customers to help them navigate the challenges impacting their business, through cost optimization, vendor consolidation and AI-led business transformation'.
Aarthi Subramanian, Executive Director - President and Chief Operating Officer who addressed the TCS press conference for the first time after joining during the last quarter, said: 'Across industries, clients are increasingly shifting their focus from using case-based approach to ROI-led scaling of AI. We are investing across the AI ecosystem, including infrastructure, data platform solutions, AI agents and business applications. Launching TCS SovereignSecureTM Cloud, TCS DigiBOLTTM, and TCS Cyber Defense Suite, to accelerate India's AI led transformation was a particular highlight of this quarter,' she said.
Due to the uncertainties in business environment, the company has not announced any wage increase neither indicated any time frame in the near future. However, it said wage increase should be announced during the year.
It has not quantified as to how many freshers would be onboarded this year but said it would honour all the job offers it had made on the campuses.
As at the end of first quarter this fiscal, the company's workforce stands at 6,13,069. Net head count during the quarter increased by 6,071. The LTM IT Services attrition rate was at 13.8%.
Milind Lakkad, Chief HR Officer, said: 'Talent development is core to TCS. In this quarter, our associates invested 15 million hours in building expertise in emerging technologies, enabling them to lead the transformation journey for our customer. It is gratifying to note that TCS now has 1,14,000 people with higher order AI skills,' he added.
The company said it was confident of improvements in it's performance during this financial year.
Samir Seksaria, Chief Financial Officer, said: 'We continued our investments in long-term sustainable growth this quarter. We stayed agile and adapted to the dynamic environment, delivering steady margins. Our industry leading profitability alongside robust cash conversion, positions us well to make strategic investments for the future'.
During the quarter, industry-wise BFSI grew 1%, consumer de-grew 3%, life science de-grew 9.6%, manufacturing de-grew 4%, Technology Services grew 1.8%, Communications & media de-grew 9.6%, energy resources grew 2.8%, and regional markets de-grew 8.6% indicating the headwind faced by businesses.
Region-wise, the company's North America business de-grew 2.7%, Latin America was up 3.5%, U.K. was down 1.3%, Continental Europe down 3.1%, Asia Pacific grew 3.6%, and India business was down 21.7% due to the impact of the completion of the BSNL contract and MEA grew 9.4%.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Infosys's strong showing not enough to power Indian IT in slow first quarter
Infosys's strong showing not enough to power Indian IT in slow first quarter

Mint

time29 minutes ago

  • Mint

Infosys's strong showing not enough to power Indian IT in slow first quarter

Next Story Jas Bardia Infosys has emerged as the fastest-growing Indian IT services company, significantly exceeding analysts' expectations with its latest quarterly results. But while Infosys is optimistic about its growth this year, the IT services sector remains wary of persistent macroeconomic challenges. Infosys CEO Salil Parekh announcing the company's Q1 results in Bengaluru on 23 July. (PTI) Gift this article Infosys Ltd grew the fastest among India's five largest information technology services companies, reporting its best first-quarter performance in four years defying a slowdown in tech spending and macroeconomic uncertainty. Infosys Ltd grew the fastest among India's five largest information technology services companies, reporting its best first-quarter performance in four years defying a slowdown in tech spending and macroeconomic uncertainty. Infosys reported $4.94 billion in revenue for the April-June period—up 4.46% from the preceding three months and 4.82% from a year earlier—exceeding the $4.86 billion that analysts polled by Bloomberg had expected on average. Much of this increase in business was from energy companies, which made up 27% of the company's incremental revenue of $211 million. Infosys also raised the lower end of its revenue guidance for 2025-26 to 1-3% in constant currency terms, higher than the flat-3% growth it had projected in April, which was its slowest revenue guidance in at least a decade. Constant currency does not take currency fluctuation into account. HCL Technologies Ltd, too, recently increased the lower end of its full-year guidance. It now expects revenue growth of 3-5% in constant currency terms for FY26, up from its April projection of 2-5% growth. Much of the boost in Infosys's guidance is because of its acquisitions of US-based MRE Consulting and Australian cybersecurity services firm The Missing Link for about $98 million, both of which were announced earlier this year. Revenue from these two acquisitions make up almost 0.4% of the company's overall revenue growth, according to Infosys's management. Macro headwinds TCS fared the worst among India's five largest IT services companies in the first quarter with a 0.59% sequential decline in revenue to $7.42 billion—its worst first-quarter performance in 5 years. HCL Technologies, the country's third-largest IT outsourcer, ended the June quarter with revenue of $3.55 billion, up 1.34% sequentially, while Tech Mahindra, the fifth-largest, saw its revenue grow 0.97% to $1.56 billion. Fourth-largest Wipro ended with $2.59 billion in revenue, down 0.35% sequentially. Infosys's management sounded sanguine on the company's future. 'With the current outlook, we have seen a lot of the discussion on the economy worldwide having come to more stable situations but still seems that it's not fully settled," said Salil Parekh, chief executive of Infosys, during the company's post-earnings press conference on Wednesday. Parekh's view was similar to that of his peers at TCS, Wipro, and Tech Mahindra, which have blamed macroeconomic uncertainties for delayed decision-making and project implementation by customers. However, HCLTech's management has said the macroeconomic environment is stable, with some sectoral variations. Infosys's operating margins in the first quarter were not much to cheer about. The company reported profitability of 20.8%, down 20 basis points sequentially, making Infosys the third large Indian IT outsourcer to slash its margins. (One basis point is a hundredth of a percentage point.) HCLTech and Wipro's operating margins narrowed 160 basis points and 20 basis points to 16.3% and 17.3%, respectively. On the other hand, TCS and Tech Mahindra's operating margins widened 30 basis points and 60 basis points to 24.5% and 11.1%, respectively. Infosys's big wins Infosys expects growth to pick-up in the next few quarters. Chief financial officer Jayesh Sanghrajka said the company raised the lower end of its full-year projections on the back of a 'strong quarter and strong deal wins". Parekh said the optimism was based on Infosys securing more consolidation deals from clients, especially in the US, its biggest market. 'We are seeing clients are selecting us more and more when they are looking at consolidation, because inherently, clients see Infosys as delivery, as very strong and stable, and also providing new ideas, especially on AI, for improvements into their business," said Parekh. Infosys reported large deal signings worth $3.8 billion in the first quarter, up 46% sequentially. While TCS has said that it expects IT spending by clients to resume once there is clarity in the market, Tech Mahindra has given mixed signals, its management saying that it is too soon to predict revenue growth or even a recession. HCLTech and Wipro are optimistic of a better second half in FY26 on the back of recent deal wins and a strong order pipeline. 'Infosys's Q1FY26 results reflect beat on revenues with a 4.46% (quarter-on-quarter) USD revenue growth with internals suggesting that it (growth) is not aided by any sequential rebound in pass-through revenues," said Manik Taneja, executive director for IT services at Axis Capital. However, a point of concern was Infosys's net profit, which fell 0.49% sequentially to $809 million in the June quarter. Infosys is the fourth large IT outsourcer to report a fall in net profit for the first quarter. Tough road ahead Infosys increased its headcount by 210 to end the June quarter with 323,788 employees. HCLTech cut headcount by 269 people to end the first quarter with 223,151 employees, while Tech Mahindra's headcount fell by 214 to 148,517 employees. Wipro also reduced headcount in the first quarter, by 114 people to 233,232 employees. TCS is the only top IT outsourcer in the country to have added headcount during the June quarter, up by 5,090 people to end the period with 613,069 employees. Three of the country's five largest IT outsourcers cutting headcount signals a tougher road ahead. More headcount in an IT services company implies more demand for their IT services. The decrease in headcount comes in the backdrop of a tariff war started by US President Donald Trump coupled with geopolitical uncertainties. These can force large Fortune clients, many of which count Infosys as their IT vendor, to hold their IT spending. Infosys shares were up 1.26% at $18.49 apiece on the New York Stock Exchange at 6:04 pm IST. On NSE, before its results were announced, Infosys ended Wednesday down 0.76% at ₹ 1,558.90 each, while the Nifty IT index gained 0.16%. Topics You May Be Interested In Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

Infosys leads IT peers in Q1, raises lower end of revenue guidance
Infosys leads IT peers in Q1, raises lower end of revenue guidance

Business Standard

timean hour ago

  • Business Standard

Infosys leads IT peers in Q1, raises lower end of revenue guidance

Infosys' net profit rose 8.7 per cent to Rs 6,921 crore for the first quarter ended June 30, helped by interest income of Rs 327 crore and reversal of net tax provisions of Rs 101 crore for previous assessment years. Sequentially, net profit was down 1.6 per cent. Revenue was up 7.5 per cent to Rs 42,279 crore, supported by strong deal wins in financial services and the manufacturing business, even in a subdued macroeconomic environment. Revenue was up 3.3 per cent on a quarter-on-quarter basis. Both numbers beat Bloomberg estimates, where analysts had pegged net profit at Rs 6,778 crore and revenue at Rs 41,724 crore. Backed by large deal wins worth $3.8 billion, India's second-largest software services provider raised the lower end of its guidance to 1 per cent from nil growth it had guided a quarter earlier. At the top end, it still expects to grow at 3 per cent in constant currency for the full year. 'It is a quarter of strong deal wins that helped us to raise the guidance at the lower end. At the upper end, we still see uncertainty and the impact of tariffs,' chief financial officer Jayesh Sanghrajka said on Wednesday. Infosys' numbers stand out in a tepid quarter for Indian IT companies. Dollar revenue growth was 4.8 per cent compared to the same period a year earlier—second only to HCLTech, which grew at 5.4 per cent. However, on a constant currency basis—which discounts the impact of currency volatility—Infosys led the pack with 3.8 per cent growth. Its larger rival TCS saw revenue drop by 3.1 per cent. Compared to TCS, Infosys also stood out as it saw growth in the BFSI vertical in the US. The management said that growth was particularly strong in the financial segment in the US. 'The large deals are working very well, which includes mega deals where clients are focused on artificial intelligence and transformation. Clients are also focused on cost and efficiency of their own operations, and so these large deals benefited from vendor consolidation,' chief executive officer and managing director Salil Parekh said. Brakes on discretionary spending, fuelled by a bleak macroeconomic environment and clouded by tariff and trade negotiations by the US, have prompted customers across businesses to rein in costs. Hence, large deals—which take time to materialise and commence even after being awarded—have become the bird's eye of the IT companies. However, these deals also come with heavy upfront investment, intense competition, and are revenue-accretive after some time. That immediately impacts the margins. Infosys' operating margin was down 30 basis points to 20.8 per cent in the first quarter compared to last year, as it increased salaries for a large portion of its employees from April. The fact that the company still expects full-year margins to be within 20–22 per cent, despite some improvement in deal visibility and pipeline, indicates that it will be under pressure. 'There are some headwinds of lower growth, the fixed costs will play out, impact of wage hikes, and large deals will ramp up cost,' explained Sanghrajka. Shaji Nair, research analyst, Mirae Asset Sharekhan, said Infosys reported strong Q1 revenue growth beating estimates, while margin was largely in line with consensus despite a challenging environment. 'Growth was aided by pricing, AI productivity benefits, and broad-based growth across verticals. Large deal TCV wins were robust and exceeded the average of the last four quarters. The company, with strong traction in financial services, leadership positioning in AI enterprise, and growing AI adoption, is well positioned to capture cost optimisation, AI-driven transformation opportunities, and vendor consolidation opportunities,' said Nair. Financial services and manufacturing, which contributed 28 per cent and 16 per cent to the topline respectively, were up 5.6 per cent and 12.2 per cent. The growth in manufacturing stood out at a time when other companies have seen their revenue hammered due to tariff fears. North America was up 0.4 per cent year-on-year on a constant currency basis, but Europe grew by 12.3 per cent. 'All businesses in North America are seeing good traction. In financial services for our 20 large clients, in half of them we are the AI partner of choice,' said Parekh. Infosys added just 210 people during the last quarter and its employee headcount was 323,788 at the end of June 30. Voluntary attrition, on a last twelve-month basis for IT services, inched up to 14.4 per cent from 12.7 per cent a year ago. Utilisation, excluding trainees, was 85.2 per cent—similar to the levels of other IT firms. The company maintained it will hire 20,000 fresh engineering graduates this fiscal. TCS and Wipro have also stuck to their previously stated numbers but have cautioned that the final figures will depend on the demand environment.

Infosys Q1 PAT drops 1% QoQ to Rs 6,921 cr; revises FY26 revenue guidance to 1%-3%
Infosys Q1 PAT drops 1% QoQ to Rs 6,921 cr; revises FY26 revenue guidance to 1%-3%

Business Standard

timean hour ago

  • Business Standard

Infosys Q1 PAT drops 1% QoQ to Rs 6,921 cr; revises FY26 revenue guidance to 1%-3%

Infosys reported 1.59% decline in consolidated net profit to Rs 6,921 crore on 3.31% increase in revenue from operations to Rs 42,279 crore in Q1 FY26 over Q4 FY25. On a year on year (YoY) basis, the companys net profit and revenue jumped 8.68% and 7.54%, respectively in Q1 FY26. Profit before tax (PBT) stood at Rs 9,740 crore in Q1 FY26, up 0.8% QoQ and 7.97% YoY. Operating profit in the first quarter of FY26 was at Rs 8,803 crore, up 2.7% QoQ and up 6.2% YoY. Operating margin declined to 20.8% in Q1 FY26, compared to 21% in Q4 FY25 and 21.1% in Q1 FY25. During Q1 FY26, constant currency (CC) revenue grew by 3.8% YoY and 2.6% QoQ. In dollar terms, the IT firm reported revenues of $4,941 million, registering a 4.8% year-on-year growth for the quarter ended 30th June 2025. In Q1 FY26, free cash flow stood at $884 million, registering de-growth of 19.2% year on year. The total contract value (TCV) of large deal wins was $3.8 billion in Q1 FY26, with a net new of 55%. The companys total clients stood at 1,861 as on 30th June 2025 as compared with 1,867 clients as on 30th June 2024. The IT major has informed that the voluntary attrition rate (LTM IT Services) came in at 14.4% in Q1 FY26, up from 14.1% in Q4 FY25 and 12.7% in Q1 FY25. For FY26, the company has revised its revenue growth guidance to 1%3% in constant currency (CC), up from the earlier range of 0%3%. The operating margin forecast remains unchanged at 20%22%. Salil Parekh, CEO and MD, said, Our performance in Q1 demonstrates the strength of our enterprise AI capabilities, the success in client consolidation decisions, and the dedication of our over 300,000 employees. Our large deal wins of $3.8 billion reflect our distinct competitive positioning and deep client relationships. Jayesh Sanghrajka, CFO, said, Q1 performance is a clear reflection of our unwavering focus on multiple fronts resulting in strong growth at 2.6% QoQ, resilient margins at 20.8% and EPS increase of 8.6% YoY. We continue to leverage Project Maximus to make investments in strategic priorities to drive profitable growth and enhance shareholder value, cash flow conversion was well above 100% for the fifth consecutive quarter. The impact of currency volatility was effectively managed through our proactive hedging strategy.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store