TCS shares in the red ahead of Q1 results: Here is how IT bellwether fared in June quarters of FY25 and FY24

Last seen, the stock was trading 0.38% lower at ₹3,370.90 on the NSE.

The company, along with other Tier 1 IT firms, is expected to report a subdued set of numbers for the period as the companies remain cautious, given the macroeconomic uncertainty, and are still hesitant to take long-term decisions (procrastination has increased), but the reconciliatory stance, especially on reciprocal tariffs, has helped de-escalate the situation.

According to analysts, global conflicts have impacted client visits to Centres of Excellence (CoEs) and have elongated deal closures.

According to a research note by InCred Equities, Tier-I IT services companies will report an average constant currency (CC) revenue decline of 0.4% QoQ in 1QFY26F, as the tariff-uncertainty-led delay in decision-making continues to impact both existing/new deal conversion & ramp-up.

Reported growth in US dollar terms could be higher, as the average has USD appreciated by nearly 6% versus the Great Britain Pound (GBP) and by 7.7% against the Euro, they note.

Q1 FY25 Numbers

The country's largest IT services player, TCS, reported an 8.7% growth in the June quarter of the fiscal year 2024-2025 (Q1 FY25) net profit at ₹12,040 crore but sounded unsure about sustaining growth momentum in the remainder of the fiscal year.

TCS posted revenue growth of 5.4% to ₹62,613 crore for the quarter, and chief executive and managing director K. Krithivasan said that the company was happy with the all-round growth.

From a geographical mix perspective, revenue from North America declined by 1.1%, leading to the share of the largest market slipping to 49.5% in the pie, while the same from India grew 61.8% on the back of the 4G network rollout work it is doing for state-run telco BSNL.

The largest vertical of banking, financial services and insurance also saw a 0.9% degrowth in revenues during the quarter, and Krithivasan said both North America and the vertical were intertwined, and once one grows, the other will also start displaying a jump.

It reported new deal wins of $8.3 billion in the June quarter, of which $4.6 billion were from North America and $2.7 billion came from the BFSI vertical, Krithivasan said.

The new wins, or total contract value, were much lower when compared to both the quarter-ago period and the year-ago period, but the CEO said the company is comfortable till the quarterly figure is between $7 and $9 billion.

The company's operating profit margin narrowed to 24.7%, largely because of the impact of wage hikes, and its chief operating officer (COO) Samir Seksaria said it is hoping to bet on operational efficiencies and revenue growth to take the number higher as the fiscal year progresses.

The COO said that 26-28% continues to remain the aspirational number for the company but declined to specify if it will be able to exit FY25 in that band.

On the headcount front, the company added employees at a net level for the first time in multiple quarters, with the overall strength going up by 5,452 to nearly 6.07 lakh professionals.

Its human resources chief, Milind Lakkad, said it welcomed 11,000 trainees during the quarter, some of whom were spillover from the last fiscal year, which had seen delays in onboarding.

Q1 FY24

The country's largest software exporter, TCS, reported a 16.83% jump in its consolidated net profit at ₹11,074 crore for the June quarter of the fiscal year 2023-24 (Q1 FY24).

Its revenue from operations increased 12.55% on a year-on-year (YoY) basis to ₹59,381 crore and was marginally up from the preceding March quarter's ₹59,162 crore.

In a statement, the company said its order book stood at $10.2 billion and termed it a "robust" one.

Its newly appointed chief executive and managing director, K. Krithivasan, said, "We remain confident in the longer-term demand for our services, driven by the emergence of newer technologies."

The company's operating profit margin increased marginally to 23.2% from 23.1% a year ago.

Its chief financial officer, Samir Seksaria, said the operating profit margin at 23.2% includes a 2-percentage-point impact of the annual wage hike for employees.

TCS added 523 employees on a net basis to take its overall headcount to over 6.15 lakh as of June 30, 2023.

The attrition rate was 17.8%.

Its chief of human resources, Milind Lakkad, said it had given a wage hike of 12-15% to exceptional performers.

From a segmental perspective, growth was led by clients in the life sciences and healthcare sector at 10.1%, while its mainstay of banking, financial services and insurance grew only 3%.

Among the geographies, the United Kingdom led with a 16.1% revenue growth, while North America grew at 4.6%.

It can be noted that North America and BFSI – which constitute the biggest revenue pie for the sector – were the most affected at that time, wherein some banks had gone down in the US due to asset-liability mismatches amid interest rate hikes to tame the runaway inflation by the Federal Reserve.