TCS Q1 Profit up 6%, Revenue Down 3.1% on Delayed Client Decision Making Operating margins for the June quarter narrowed to 24.5 per cent from 24.7 per cent in the corresponding quarter of the previous year but expanded 30 basis points from 24.2 per cent in preceding three months.

Kicking off the Q1 earnings season, Tata Consultancy Services (TCS), India's largest software exporter by revenue, reported a net profit of INR 12,760 crore for the first quarter ended June, up 6 per cent from a year ago.

The revenue for the June quarter declined 3.1 per cent in constant currency from the year-ago period to INR 63,437 crore, on the back of delays in decision making from clients. The total contract value (TCV) of deals for the first quarter stood at USD 9.4 billion.

K Krithivasan, Chief Executive Officer and Managing Director, TCS said, "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. We remain closely connected to our customers to help them navigate the challenges impacting their business, through cost optimization, vendor consolidation and AI-led business transformation."

The Indian IT services industry has been facing challenges over the past few quarters due to continued caution around discretionary spending, delayed decision-making, and tighter project scrutiny weighing on deal ramp-ups and execution.

Operating margins for the June quarter narrowed to 24.5 per cent from 24.7 per cent in the corresponding quarter of the previous year but expanded 30 basis points from 24.2 per cent in preceding three months.

"We continued our investments in long term sustainable growth this quarter. We stayed agile and adapted to the dynamic environment, delivering steady margins. Our industry leading profitability alongside robust cash conversion, positions us well to make strategic investments for the future," Samir said Seksaria, Chief Financial Officer, TCS.

BFSI and Consumer are the largest verticals for TCS which together account for close to half the revenues for TCS. Revenues from BFSI grew 1 per cent annually in constant currency and contributed 32 per cent to the total revenue for the June quarter. Revenues from Consumer declined 3.1 per cent in constant currency, contributing 15.6 per cent to the total revenues as of June quarter.

The attrition rate increased to 13.8 per cent from 12.1 per cent in the year-ago period and 13.3 per cent in the preceding three months. It reported a net headcount addition of 6071 employees taking the total strength to 613,069 employees as of the June quarter.

Analysts believe TCS's financial results this quarter underscore the company's resilience and its ability to deliver consistent value to stakeholders, even amid global economic uncertainties. "The company's stable performance reflects a balanced portfolio, robust client relationships, and a continued focus on innovation and operational excellence," said D.D. Mishra, VP Analyst at Gartner.

"While the company has faced some headwinds in discretionary spending and slower decision-making cycles in certain markets, TCS's disciplined execution and diversified client base have enabled it to weather these challenges effectively. This quarter's results reaffirm TCS's position as a bellwether of the IT services industry, while also highlighting the need to stay agile and responsive to shifting client priorities. TCS needs to watch out for currency fluctuations, geopolitical and regulatory risks, and slower decision cycles," Mishra added.

TCS declared its results on Thursday after markets hours. Ahead of the results, shares of TCS closed down 0.06 per cent at INR 3,382.30 on the BSE.