Summary of the TCS Q2 FY25 earnings conference call
- Revenue Performance:
- Revenue grew 5.5% year-on-year in constant currency
- Q2 operating margin was 24.1%, declining 60 basis points sequentially
- Net margin was 18.5%
- Deal Momentum:
- Strong deal momentum with order book at $8.6 billion for Q2
- Total Contract Value (TCV) was within the comfort range of $7-9 billion
- Sector Performance:
- BFSI showed signs of recovery, especially in North America
- Life Sciences and Healthcare faced client-specific challenges
- Manufacturing saw some near-term pressure due to labor and supply chain issues
- Consumer Business Group experienced softness in discretionary spending
- Geographic Performance:
- Growth markets (India, APAC, Latin America, Middle East and Africa) performed well
- North America saw some weakness, partly due to client-specific issues
- AI and GenAI Progress:
- Over 600 AI/GenAI engagements, up from 270 last quarter
- 86 GenAI engagements went into production, compared to 8 last quarter
- Workforce:
- Total workforce at 612,724
- Net addition of 5,726 employees in Q2
- LTM attrition in IT services decreased to 12.3%
- Future Outlook:
- Cautious optimism about improved discretionary spending
- Expecting gradual easing of inflation and improving macroeconomic trends
- Focus on cost optimization and efficiency remains a priority for clients
- Strategic Focus:
- Investing in growth markets for long-term growth
- Strengthening partnerships with ISV and ecosystem partners
- Emphasis on building resilience with clients
- Challenges:
- Some client-specific issues impacting revenue in certain sectors
- Continued caution in discretionary spending by clients
- Geopolitical uncertainties affecting overall business environment
- Capital Allocation:
- Interim dividend of ₹10 per share declared
- Commitment to returning surplus free cash flow to shareholders.
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