TCS Q3 Results: Will Dalal Street see a bullish rally on January 10?

Tata Consultancy Services (TCS) reported its Q3 results for the fiscal year 2025 on January 9, with results meeting market expectations. The company recorded a strong total contract value (TCV) in the quarter, fueling optimism for long-term growth. CEO K. Krithivasan highlighted growth in the BFSI and CBG sectors and expressed confidence in future opportunities driven by investments in upskilling and AI innovations.

Key Highlights from TCS Q3 Earnings:

Financial Performance: TCS reported a consolidated revenue of ₹63,973 crore for the quarter, a 5.6% year-on-year (YoY) increase from ₹60,583 crore. In constant currency terms, revenue grew by 4.5%. Profit attributable to shareholders increased by 12%, reaching ₹12,380 crore from ₹11,058 crore last year. Operating margin stood at 24.5%, showing a 40 basis point improvement from the previous quarter, although it was 50 basis points lower compared to the same period last year.

Sector Performance: TCS saw growth in key sectors, with BFSI growing by 0.9% YoY in constant currency. The consumer business also grew by 1.1% YoY. However, the communications and media segment experienced a 10.6% YoY decline, and the life sciences and healthcare segment decreased by 4.3% YoY.

Geographic Performance: TCS saw strong growth in its domestic market, with India growing by 70.2% YoY. The MEA (Middle East and Africa) region also showed impressive growth, up by 15%. However, North America and Continental Europe experienced YoY declines of 2.3% and 1.5%, respectively, in constant currency terms.

Key Deal Wins: TCS achieved a robust TCV of $10.2 billion in Q3, with a book-to-bill ratio of 1.4. Notable deal wins included an extended partnership with Telenor Denmark, a multi-year agreement with Air France-KLM, and a 15-year contract with Ireland’s Department of Social Protection. The company also secured a strategic partnership with Canada’s largest worker compensation board, the WSIB, and a multi-year deal with a leading US life and annuities provider.

Workforce Updates: TCS’ workforce reached 607,354 employees as of December 31, 2024. The company continues to focus on diversity, with 35.3% of its workforce being women and employees representing 152 nationalities. Attrition for the IT services segment was recorded at 13% for the last 12 months. The company remains committed to employee upskilling and plans to onboard more campus hires in the coming year.

Dividend Announcement: TCS declared a third interim dividend of ₹10 per share, along with a special dividend of ₹66 per share. Both dividends will be paid to shareholders on February 3, 2025, with a record date set for January 17, 2025.

With strong financial performance, strategic deal wins, and a focus on innovation and upskilling, TCS is positioned for continued growth in the upcoming quarters.