TCS | Image:Facebook Photo
TCS Q4 earnings: Tata Consultancy Services (TCS) expressed confidence in its robust deal pipeline to drive growth in fiscal 2025 following its announcement of lower-than-expected quarterly revenue, primarily attributed to weak client spending in North America.
The IT sector, valued at $254 billion, has witnessed clients scaling back discretionary expenditures amid inflationary pressures and concerns of recession in key markets like the United States and Europe. According to Nasscom, the industry’s overall revenue growth halved to 3.8 per cent in the last financial year.
TCS reported a revenue growth of 3.4 per cent for fiscal year 2024, adjusted for currency fluctuations, down from 13.7 per cent growth in the previous fiscal year.
CEO K Krithivasan expressed optimism, stating, “We believe that we are bottoming out. I don’t want to call it, but we should start seeing growth (in its largest market and vertical) soon with a healthy pipeline over the last few quarters.” He further added, “FY25 will be better than FY24.”
In the fourth quarter, revenue from North America, which constitutes half of TCS’ total revenue, declined by 2.3 per cent, while revenue from its largest vertical, banking, financial services, and insurance clients, fell by 3.2 per cent.
Despite missing analysts’ expectations, TCS recorded a consolidated revenue of Rs 61,237 billion crore in the January-March quarter. N Ganapathy Subramaniam, the chief operating officer, attributed the decline in discretionary spend to various factors such as elections, wars, and uncertainty related to AI regulation.
TCS announced the retirement of N Ganapathy Subramaniam, stating that it did not plan to appoint a new COO “for now” and would distribute the responsibilities among its current leaders.
The company secured a record $13.2 billion worth of orders in the quarter, including a 15-year mega deal with UK insurer Aviva, showcasing its strength in deal wins across industries and geographies.
TCS’s operating margin increased by 150 basis points to 26 per cent, contributing to a 9.2 per cent rise in net profit to Rs 12,434 crore. The strong performance was noted by analysts amid concerns over macro headwinds and conservative tech spending.
TCS’s peers Infosys and Wipro are scheduled to report their results next week.
Despite challenges, TCS’s shares have gained about 6 per cent year-to-date, outperforming the IT index and the blue-chip Nifty 50 index.
(With Reuters inputs)
