The share price of the Tata Group which deals in the business of IT services, consulting, and business solutions in India was up by 6.28 percent on Thursday which is due to quarterly result announcements, special dividend, and management commentary.
Share Price Movement
In Friday’s trading session, Tata Consultancy Services Ltd’s share price was up by 6.28 percent trading at Rs. 4,290.55 per share. The share price reiterated from the day’s high and was trading at Rs. 4,282 which is 6.08 percent higher than the previous closing price of Rs. 4,036.65. In the past year, the stock has delivered around 15.43 percent and has outperformed the Nifty Index in the past year.
What Happened
The company’s stock surged after it released its quarterly financials and announced a dividend and special dividend, including guidance.
In its latest filing for the quarter ending December 2024, the company reported a 5.59 percent rise in revenue, reaching Rs.63,973 crore compared to Rs.60,583 crore in Q3 FY24. On a quarter-over-quarter basis, the operational revenue fell by 0.44 percent from Rs.64,259 crore in Q2FY25.
During the same period, net profit increased by 12.13 percent to Rs.12,444 crore in Q3 FY25, compared to Rs.11,097 crore in Q3FY24, and increased by 4.09 percent from Rs.11,955 crore in Q2FY25.
Regarding return ratios, the return on equity (ROE) stands at around 51.04 percent. The Net profit margin for FY24 stood at 19.14 percent. The stock is trading at a P/E (Price to Earnings) ratio of around 31.8, which is lower than the industry average of 34.93. The company also boasts a strong current ratio of 1.75 and a debt-to-equity ratio of 0.09.
In Q3FY25, the company’s revenue from North America contribution was 47.7 percent which fell by 2.3 percent year on year followed by the United Kingdom’s 16.60 percent, Continental Europe contributed 13.9 percent, Asia Pacific – 7.8 percent, India – 9.8 percent, Middle East Asia – 2.3 percent and Latin America – 1.9 percent. The total contract value (TCV) stood at $10.2 billion for the quarter.
Management Commentary
Tata Consultancy Services CEO and Managing Director K.Krithivasan on CY25 said “After witnessing negative constant currency (CC) growth across major geographies, we are now seeing an improvement in sentiment around discretionary spending in certain verticals. The total contract value (TCV) going up after two quarters further reinforces our confidence in the medium term,” and said that the year 2025 to be better than 2024.
Dividend Announcements
On January 9th, 2024, The company announced an interim dividend on the face value of Rs. 1 per share, constituting Rs. 10 per share. Additionally, they announced a Special Dividend of Rs. 66 per equity share. The total dividend will amount to Rs. 76 per share. The record date is fixed on 17th January 2025.
Recent Acquisition
The Board approved a proposed acquisition of TRIL Bengaluru Real Estate Five Limited and TRIL Bengaluru Real Estate Six Limited for a consideration not exceeding Rs. 1,625 crore and to hold a 100 percent stake. The purpose of the acquisition is to own the land to build delivery centers.
Company Profile
Tata Consultancy Services (TCS) is a leading global IT services, consulting, and business solutions organization. It was established in 1968 and is headquartered in Mumbai. As part of the Tata Group, they operate in over 54 countries with a workforce of approximately 6,01,000 consultants. The company’s business model focuses on delivering customized solutions across various sectors, such as banking, healthcare, and manufacturing. TCS employs a Location Independent Agile delivery model to improve efficiency and responsiveness. Their services focus on application development, business process outsourcing, and digital transformation.
Written by – Santhosh S
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