Thu Oct 10 14:20:14 UTC 2024: ## TCS Reports 5% Rise in Net Profit for Q2 FY25 Despite Margin Contraction

**Mumbai, India -** Tata Consultancy Services (TCS), India’s largest IT services company, announced a five percent rise in net profit for the second quarter of FY25, reaching ₹11,909 crore. The company’s strong performance was attributed to large deals signed in previous quarters, but margins took a hit, narrowing to 24.1%.

Despite the above-estimated top-line growth, analysts like Sagar Shetty of StoxBox pointed to “pressured margins” likely due to TCS’s deep dive into the talent pool, with the expected offset from deferred wage hikes failing to materialize.

TCS saw continued growth in key areas like cybersecurity, AI, cloud, and TCS Interactive. The company also reported strong growth in its BFSI vertical and growth markets, with several major deals sealed during the quarter. These include partnerships with Rolls-Royce, Follett Higher Education, Golden Arches Development Corporation (McDonald’s Philippines), and Openreach.

TCS emphasized its continued momentum in AI/GenAI adoption, with over 600 AI/GenAI engagements successfully deployed in production or development phases. The company also highlighted its focus on security, with clients increasing spending on security guardrails for AI/GenAI adoption.

However, TCS faces challenges in the European market, with a challenging outlook despite mega-deal wins. Investors will be closely monitoring the company’s performance in the financial services vertical, the impact of insourcing by large clients, and the state of discretionary spending.

The company’s board declared an interim dividend of ₹10 per share. TCS’s workforce strength now stands at 612,724, with a net headcount addition of 5,726 in the quarter. The company’s total revenue reached ₹64,988 crore, a 7.06% increase year-on-year.

The company will host an earnings conference call on October 10th, where its leadership team will discuss financial performance and take questions.

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