TCS Q2 Performance amid Geopolitical Challenges: A Mixed Bag of Growth and Investments

Tata Consultancy Services reported a slight quarterly dip in net profit despite annual growth, driven by sectors including energy and utilities. TCS declared a second interim dividend, while investing in talent and infrastructure. Initiatives in AI and cybersecurity and significant deals mark its strategic direction.

Tata Consultancy Services (TCS) reported a modest decline of 1.1% in its quarter-on-quarter net profit, dropping to Rs 11,909 crore for the second quarter ending September 30, despite witnessing a 5% increase year-on-year. The company's Q2FY24 revenue incrementally rose to Rs 64,259 crore.

In light of recent financials, TCS announced a second interim dividend of Rs 10 per share, with the eligibility determined by October 18, 2024. This move follows an identical interim dividend declared in July. The company's growth was primarily fueled by the Energy and Utilities sectors, according to an official statement.

CEO and MD K Krithivasan noted persistent conservative market trends amidst geopolitical uncertainties but highlighted recovery in the BFSI sector and robust performance in growth markets. TCS's operating margin has slightly tightened to 24.1%, with a net margin at 18.5%. Furthermore, the company expanded its workforce by 5,726 employees over the quarter.

Chief Financial Officer Samir Seksaria emphasized their strategic investments in talent and infrastructure, ensuring long-term growth with superior cash conversion. TCS continues to gain momentum in AI technology, with marked advancements in cybersecurity expected to boost revenue as client investments grow.

A significant Rs 15,000 crore deal with BSNL, focusing on data centers and 4G infrastructure, is projected to benefit TCS in upcoming quarters. By September 30, TCS had filed for 8,354 patents and successfully secured 4,369 patents. The organization employs 612,724 individuals, with a diverse representation of 150 nationalities and 35.5% women.

(With inputs from agencies.)