Tata Consultancy Services (TCS), India's largest IT services company, saw a significant block trade on the National Stock Exchange (NSE) amidst the release of its first-quarter results. Approximately 65,160 shares of TCS changed hands in a block deal valued at Rs. 21.68 crores, with the shares trading at Rs. 3,327.70 per share.

Q1 Financial Highlights

The block trade coincided with TCS announcing its financial results for the quarter ended June 30. Despite global macroeconomic challenges, TCS demonstrated resilience in its performance:

• Revenue reached Rs. 63,437 crore, showing a year-on-year growth of 1.3% in rupee terms.
• Net profit stood at Rs. 12,760 crore, up 6.0% compared to the same quarter last year.
• Operating margin improved to 24.5%, expanding by 30 basis points quarter-on-quarter.
• Earnings per share (EPS) for the quarter was Rs. 35.27, up from Rs. 33.28 in Q1 of the previous year.

Segment Performance

TCS's performance across various industry verticals showed mixed results:

Strategic Developments

K Krithivasan, CEO and Managing Director of TCS, commented on the quarter's performance: "The continued global macro-economic and geo-political uncertainties caused a demand contraction. On the positive side, all the new services grew well. We saw robust deal closures during this quarter."

TCS reported a strong order book with total contract value (TCV) of US$9.4 billion for Q1. The company continues to invest in artificial intelligence capabilities, with over 114,000 employees now possessing higher-order AI skills.

Dividend Declaration

The Board of Directors declared an interim dividend of Rs. 11 per equity share. The dividend will be paid on August 4, to shareholders on record as of July 16.

Workforce and Attrition

As of June 30, TCS's workforce stood at 613,069 employees. The company reported a net addition of 6,071 employees year-on-year. The Last Twelve Months (LTM) IT services attrition rate decreased to 13.8%, indicating improved retention.

The block trade of 65,160 shares, valued at Rs. 21.68 crores, represents a small fraction of TCS's total outstanding shares. While the identity of the buyer and seller in this transaction remains undisclosed, such block deals are not uncommon for large-cap stocks like TCS and often reflect institutional investor activity.

As TCS navigates through global economic uncertainties, its focus on new services, AI capabilities, and maintaining a strong order book positions the company to capitalize on emerging opportunities in the IT services sector.

Tata Consultancy Services (TCS), India's largest IT services company, has reported a mixed performance in its first quarter results, with profit exceeding expectations despite a slight dip in revenue and challenges from the BSNL deal ramp-down. However, analysts have reduced their price targets following the soft Q1 performance.

Profit Surpasses Expectations

TCS announced a consolidated net profit of ₹12,760.00 crore for Q1, marking a 4.40% increase from the previous quarter. This figure surpassed estimates, showcasing the company's resilience in a challenging market environment. The profit boost was partly attributed to a one-time tax refund interest.

Revenue Performance and Analyst Reactions

Q1 revenue experienced a slight decrease of 0.60% sequentially to $7,421.00 million. This figure fell short of expectations, reflecting the ongoing global economic uncertainties affecting the IT sector and the impact of the BSNL deal ramp-down. Notably, TCS reported a 3.3% sequential drop in constant currency revenue.

In response to the soft Q1 performance, analysts from Nomura and UBS have reduced their price targets for TCS. The company's decision to delay salary hikes due to market uncertainties has also contributed to the cautious outlook.

Key Financial Metrics

The company's financial results revealed several noteworthy aspects:

• Operating Margin: TCS maintained a healthy operating margin of 24.50%, showing an expansion of 30 basis points quarter-on-quarter.
• Net Margin: The net margin stood at 20.10%, up 90 basis points year-on-year.
• Earnings Per Share: Basic and diluted earnings per share were reported at ₹35.27.

Segment Performance

TCS's performance across various business segments showed mixed results:

Dividend Declaration

The Board of Directors has declared an interim dividend of ₹11.00 per equity share. The record date for this dividend is set for July 16, with the payment scheduled for August 4.

Workforce and Attrition

As of June 30, TCS's workforce stood at 613,069, with a net addition of 6,071 employees year-on-year. The company reported a Last Twelve Months (LTM) IT services attrition rate of 13.80%, indicating improved retention rates.

Deal Wins and Future Outlook

Despite the challenges, TCS reported an increase in deal wins to $9.40 billion. While the management maintains an optimistic growth outlook for FY26, analysts remain cautious about growth visibility. The company remains focused on leveraging new technologies and maintaining its strong market position.

Management Commentary

K Krithivasan, CEO and Managing Director of TCS, commented on the results: "The continued global macro-economic and geo-political uncertainties caused a demand contraction. On the positive side, all the new services grew well. We saw robust deal closures during this quarter."

TCS's Q1 results demonstrate its ability to maintain profitability amidst revenue pressures and specific challenges like the BSNL deal ramp-down. The company's emphasis on AI-led business transformation and cost optimization strategies for clients indicates its readiness to navigate the evolving IT landscape. However, the reduced price targets from analysts suggest a more cautious outlook for the company's near-term performance in a dynamic global market.