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View Bear Cases →Tata Consultancy Services Ltd — Q2 FY25
TCS reported Q2 FY25 revenue of INR 64,259 crore, up 7.6% YoY, with constant currency growth of 5.5%.
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TCS reported Q2 FY25 revenue of INR 64,259 crore, up 7.6% YoY, with constant currency growth of 5.5%. Operating margin declined 60bps sequentially to 24.1%, impacted by a large transformational project and talent investments. BFSI showed signs of recovery, especially in North America, while life sciences and healthcare faced client-specific headwinds expected to stabilize by Q3. Deal TCV was $8.6 billion, with a strong pipeline near all-time highs. Management remains cautiously optimistic on discretionary spend recovery but flagged near-term pressure in manufacturing and telecom. Key risk: client-specific scope reductions and prolonged macro uncertainty could delay growth acceleration.
टीसीएस ने दूसरी तिमाही में 64,259 करोड़ रुपये की कमाई की, जो पिछले साल से 7.6% ज्यादा है। असली वृद्धि (मुद्रा प्रभाव हटाकर) 5.5% रही। मुनाफा (ऑपरेटिंग मार्जिन) 24.1% पर आ गया, जो पिछली तिमाही से 0.6% कम है। इसकी वजह एक बड़े प्रोजेक्ट और नए लोगों को काम पर रखने का खर्च है। बैंकिंग-बीमा (BFSI) में सुधार दिख रहा है, खासकर अमेरिका में। हेल्थकेयर में कुछ ग्राहकों की मुश्किलें हैं, जो अगली तिमाही तक सुलझ जाएंगी। नए सौदों का मूल्य 8.6 अरब डॉलर रहा, और आने वाले सौदों की सूची रिकॉर्ड स्तर पर है। कंपनी सावधानी से उम्मीद कर रही है कि खर्च बढ़ेगा, लेकिन मैन्युफैक्चरिंग और टेलीकॉम में दबाव है। खतरा: ग्राहक काम घटा सकते हैं और आर्थिक अनिश्चितता बनी रह सकती है।
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Client-specific scope reductions in life sciences
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Read Transcript →Quarter Snapshot
Deal TCV
$8.6B
-20% H1 vs H1 last year
Total contract value for Q2 was $8.6 billion, down from $10.2 billion in Q2 last year due to absence of mega deals.
Attrition (IT Services)
12.3%
Flat vs Q1
LTM attrition remained within the 11%-13% comfort range, reflecting stable workforce retention.
Net Headcount Addition
5,726
Similar to Q1
TCS added 5,726 employees in Q2, continuing strategic hiring for growth markets and emerging tech.
GenAI Engagements in Production
86
+975% QoQ
GenAI production engagements surged from 8 to 86, indicating rapid scaling from POC to deployment.
What Changed vs Last Quarter
NEW
Life sciences headwinds to stabilize in Q3, return to growth in Q4
Client-specific headwinds in life sciences and healthcare are expected to stabilize in Q3 and return to growth in Q4.
NEW
BSNL deal peak revenue to continue for one more quarter, then taper
The BSNL transformational program is at peak revenue; expected to remain at similar levels for one more quarter before tapering.
NEW
Margin aspiration to exit Q4 at 26%
Management aspires to exit Q4 FY25 at 26% operating margin, similar to Q4 FY24 exit.
NEW
Growth markets as long-term growth driver
TCS is investing significantly in India, APAC, Latin America, and Middle East & Africa as sustainable long-term growth drivers.
DROPPED
FY25 better than FY24
Management reiterated that FY25 will be better than FY24 in terms of revenue growth, but declined to provide specific numbers.
DROPPED
Operating margin aspirational band of 26-28%
CFO Samir Seksaria reaffirmed commitment to the 26-28% operating margin band, with levers including productivity, utilization, and pricing.
DROPPED
Campus hiring target of ~40,000 trainees
CHRO Milind Lakkad indicated that the company aims to hire close to 40,000 trainees in FY25, consistent with historical practice.
NEW RISK
Client-specific scope reductions in life sciences
A large life sciences client abruptly reduced scope, causing revenue decline. Recovery depends on client's future investment decisions.
NEW RISK
Prolonged weakness in telecom and manufacturing
Telecom and manufacturing verticals face structural headwinds; telecom due to CapEx caution, manufacturing due to labor and supply chain issues.
NEW RISK
BSNL deal tapering could create revenue gap
The BSNL deal revenue is at peak and expected to taper after Q3, potentially creating a growth headwind in H2.
NEW RISK
Margin pressure from growth market investments
Growth markets have lower margins; scaling them may pressure overall margins until volumes improve.
RISK GONE
Sustained weakness in North America and BFSI
North America revenue declined 1.1% YoY and BFSI remained negative YoY, with management citing ongoing client uncertainty and delayed decision-making.
RISK GONE
Order book lumpiness and delayed closures
Q1 TCV of $8.3B was below the $12.4B in Q4, with some large deals slipping to Q2, indicating volatility in deal closures.
RISK GONE
Dependence on BSNL for India growth
Analyst questioned whether India's 61.8% YoY growth was largely BSNL-driven, raising concerns about sustainability of growth outside this deal.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q1 FY25, Q3 FY24
CHRO Milind Lakkad indicated that the company aims to hire close to 40,000 trainees in FY25, consistent with historical practice.
Mentioned in Q1 FY24, Q1 FY25, Q3 FY24
North America revenue declined 1.1% YoY and BFSI remained negative YoY, with management citing ongoing client uncertainty and delayed decision-making.
Mentioned in Q1 FY25, Q4 FY24
Management reiterated that FY25 will be better than FY24 in terms of revenue growth, but declined to provide specific numbers.
Mentioned in Q2 FY24, Q3 FY24
Headcount declined by 5,600 in Q3. CHRO said further decline would not be surprising, which could signal lower utilization or demand.
Mentioned in Q1 FY24, Q1 FY25
CFO Samir Seksaria reaffirmed commitment to the 26-28% operating margin band, with levers including productivity, utilization, and pricing.
Fast read
Guidance and risk preview
Client-specific headwinds in life sciences and healthcare are expected to stabilize in Q3 and return to growth in Q4.
A large life sciences client abruptly reduced scope, causing revenue decline.
View Risks →