Synopsis: TCS posted an 11.95% YoY increase in consolidated net profit, reaching Rs 12,380 crore for Q3 FY25. Shares surged 4.73% to a day high of Rs 4,227.70 post-results announcement. Net sales rose 5.59% YoY to Rs 63,973 crore, with 4.5% growth in constant currency terms. Operating margin stood at 24.5%, up sequentially by 40 basis points.
Tata Consultancy Services (TCS), India’s largest IT services provider, delivered a strong financial performance in the December quarter (Q3 FY25), with consolidated net profit rising 11.95% year-on-year (YoY) to Rs 12,380 crore.
This marks a significant increase from Rs 11,058 crore reported in the same quarter last year.
Following the results, TCS shares gained strong momentum, surging 4.73% to reach a day high of Rs 4,227.70 on Friday.
Financial Highlights
Net sales for the quarter climbed 5.59% YoY to Rs 63,973 crore, compared to Rs 60,583 crore in the previous year’s corresponding period.
In constant currency (CC) terms, sales recorded a growth of 4.5% YoY.
The company’s operating margin for the quarter came in at 24.5%, a 50 basis points (bps) decline YoY but a 40 bps improvement sequentially.
TCS achieved a total contract value (TCV) of $10.2 billion during the quarter, surpassing analysts’ projections of $7-9 billion. The Book to Bill ratio stood at a healthy 1.4, reflecting robust deal flow.
Operational Metrics
The IT giant reported net cash from operations at Rs 13,032 crore, representing 105.3% of net income. Its trailing twelve-month IT services attrition rate came in at 13%, a notable improvement.
Workforce strength was reported at 6,07,354 employees at the end of the quarter.
TCS also announced an interim dividend of Rs 9 per share and a special dividend of Rs 18 per share, reinforcing its commitment to shareholder value.
Management Insights and Market Outlook
In its post-earnings press conference, TCS expressed optimism about the revival of client confidence and discretionary spending, particularly in North America, a key market for IT services.
The management’s commentary was deemed the most positive in the last two years, signaling higher growth expectations for CY25 compared to CY24.
Nuvama Institutional Equities highlighted that TCS’s EBIT margin expansion of 40 bps QoQ to 24.5% was in line with estimates.
The brokerage firm also noted strong deal flow and revised its target price for TCS to Rs 5,200, retaining a “BUY” recommendation.
Conclusion
TCS’s Q3 FY25 performance reflects a steady growth trajectory despite a challenging global macroeconomic environment.
Strong deal wins, disciplined operational efficiency, and positive management commentary have boosted investor confidence.
With the company poised for higher growth in CY25, TCS continues to solidify its position as a leader in the IT services sector.
Disclaimer:
This article is for informational purposes only and should not be considered as financial or investment advice. Readers are advised to consult with a qualified financial advisor before making any investment decisions.
