TCS Q3 result: Strong TCV, sequential growth in operating margin; 6 key highlights of TCS earnings

TCS Q3 result: India’s IT bellwether Tata Consultancy Services (TCS) reported its December quarter (Q3) numbers on Thursday, January 9, which were largely in line with market expectations.

While Q3 is a seasonally weak quarter for IT companies, TCS said it witnessed strong TCV (total contract value) during the quarter, paving the way for its long-term growth.

“We are pleased with the excellent TCV performance in Q3, which was well-rounded across industries, geographies and service lines, lending good visibility to long-term growth,” said K Krithivasan, Chief Executive Officer and Managing Director, TCS.

“BFSI and CBG are returning to growth, and the continued stellar run of regional markets and early signs of revival in discretionary spending in some verticals give us confidence for the future. Our continuing investments in upskilling, AI/Gen AI innovations and partnerships set us up to capture the promising opportunities ahead,” said Krithivasan.

TCS Q3 highlights

Let’s take a look at six key highlights of TCS’ Q3FY25 earnings:

1. TCS Q3 key numbers

The company’s consolidated revenue from operations grew 5.6 per cent year-on-year (YoY) to ₹63,973 crore from ₹60,583 crore in the same quarter last year. In constant currency (CC) terms, the company’s revenue rose 4.5 per cent.

Profit for the period under review attributable to shareholders came at ₹12,380 crore, up 12 per cent YoY, from ₹11,058 crore in Q3FY24.

Operating margin stood at 24.5 per cent, down 50 bps YoY. However, it improved 40 bps quarter-on-quarter (QoQ).

2. Performance of key domains

Among the key domains, BFSI, which saw a 0.1 per cent YoY growth in CC terms last quarter, increased 0.9 per cent YoY. The consumer business segment grew 1.1 per cent YoY in CC terms.

However, the communication and media segment de-grew 10.6 per cent YoY, and the life sciences and healthcare segment de-grew 4.3 per cent YoY.

3. India shines among geographical markets

Except for North America and Continental Europe, which declined 2.3 per cent and 1.5 per cent YoY in CC terms, all major geographical markets saw decent growth in Q3.

Indian markets grew 70.2 per cent YoY, followed by MEA (up 15 per cent YoY).

4. Key deal wins

TCS saw a strong TCV at $10.2 billion during the quarter, with a book-to-bill ratio of 1.4.

Among the key deal wins during the quarter were extended partnership with Telenor Denmark, multi-year deal with Air France-KLM and a 15-year contract with Ireland’s Department of Social Protection.

TCS was selected by Canada’s largest worker compensation board, the Workplace Safety and Insurance Board (WSIB), as a strategic partner to transform the enterprise quality assurance landscape.

The company entered a multi-year deal with a leading US life and annuities provider to transform their business operations with TCS’ AI-powered solutions and industry-proven operational efficiency levers.

Moreover, a US-based telecom major has entered a 5-year strategic relationship with TCS to provide managed services for specific solutions.

5. Workforce

TCS’ workforce stood at 607,354 as of December 31st. The employee base is diverse, with 35.3 per cent of the workforce women and 152 nationalities.

IT services’ attrition was 13 per cent for the last twelve months.

“We continue to invest in employee upskilling and overall well-being. Our campus hiring for the year is going according to plan, and preparations are afoot to onboard more campus hires next year,” said Milind Lakkad, Chief HR Officer, TCS.

6. Dividend

TCS declared a third interim dividend of ₹10 and a special dividend of ₹66 per share of ₹1 each of the company.

The third interim dividend and the special dividend shall be paid on Monday, February 3, 2025, to the equity shareholders of the company. The record date for this purpose is Friday, January 17, 2025.