Tata Consultancy Services (TCS) has recently unveiled its financial results for the second quarter of FY25, showcasing a commendable performance characterized by a notable year-on-year (YoY) increase in net profit. The company reported a 5% rise in net profit, which amounted to ₹11,909 crore, up from ₹11,342 crore during the corresponding quarter of the previous year. This positive trend underscores TCS's resilience and ability to adapt amidst various global economic uncertainties and challenges that have affected many sectors worldwide.
In a further demonstration of its commitment to delivering value to shareholders, TCS announced an interim dividend of ₹10 per share for Q2 FY25. This announcement was made during a board meeting held on Thursday, signaling the company's robust financial health and strategic focus on returning capital to its shareholders. Eligible shareholders can expect to receive this dividend payout on Tuesday, November 5, 2024. The record date for determining which shareholders are eligible for the dividend has been set for Friday, October 18, 2024. This means that shareholders whose names are officially recorded in the company’s registry or who are listed as beneficial owners of the shares by this date will qualify for the dividend.
This interim dividend represents the second payout TCS has declared for the financial year 2025, following an earlier announcement of a similar ₹10 per share dividend during the first quarter of FY25. TCS has consistently maintained a robust dividend policy, returning between 80% and 100% of its free cash flow to its shareholders. This practice has established TCS as a reliable and trustworthy dividend payer over the years, reinforcing investor confidence in the company’s financial stability and long-term growth prospects. For the financial year FY24, TCS declared a total dividend of ₹73 per share, reflecting the company’s commitment to shareholder returns and financial discipline.
In the context of total shareholder payouts, TCS reported that in FY24, its total payout, which included dividends and share buybacks, amounted to an impressive ₹46,223 crore. Notably, during April 2024, in conjunction with its fourth-quarter results, the company announced a final dividend of ₹28 per share for FY24, in addition to an interim dividend of ₹9 per share and a special dividend of ₹18 per share that was declared after the company’s third-quarter results. Moreover, TCS successfully completed a significant share buyback program worth ₹17,000 crore during FY24, further enhancing the value proposition for its shareholders and demonstrating the company’s commitment to returning excess capital to its investors.
When examining TCS's dividend history, it is notable that in FY23, the company paid a total dividend of ₹115 per share, which amounted to ₹33,306 crore, yielding a dividend yield of 3.59%. In FY22, TCS distributed ₹43 per share as dividends, totaling ₹7,686 crore, while in FY21, the dividend payout was ₹38 per share, amounting to ₹8,510 crore. For FY20, TCS announced a total dividend of ₹72 per share, which represented a substantial payout of ₹25,125 crore, illustrating the company's consistent commitment to rewarding its shareholders year after year.
In conjunction with the dividend announcement, TCS also reported its operational performance for Q2 FY25. The company recorded a 7.6% YoY increase in revenue from operations, amounting to ₹64,259 crore, which aligned well with market expectations. This revenue growth was further complemented by a 5.5% growth in constant currency terms during the quarter, indicating TCS's ability to maintain its competitive edge in a challenging global market. However, it is important to note that the operating margin stood at 24.1%, reflecting a slight decline of 20 basis points compared to the same quarter last year. The net margin for the quarter was recorded at 18.5%, highlighting the need for TCS to continue focusing on operational efficiency and cost management in the face of fluctuating market conditions.
K Krithivasan, the CEO and Managing Director of TCS provided insights into the company’s performance during the quarter, acknowledging that the cautious trends observed in recent quarters have persisted into this reporting period. He highlighted that despite the ongoing uncertainties surrounding the geopolitical landscape, TCS's largest vertical, Banking, Financial Services, and Insurance (BFSI), has shown promising signs of recovery, which is encouraging for the company's future outlook. Additionally, Krithivasan mentioned that TCS has experienced a strong performance in its Growth Markets, further indicating that the company is diversifying its revenue streams and capitalizing on emerging opportunities in various regions.
Overall, TCS's Q2 FY25 results reflect a strong operational performance and a steadfast commitment to delivering value to shareholders, which positions the company favorably for continued growth amid a challenging economic environment. As TCS navigates these complexities, its strategic focus on enhancing value for both its clients and shareholders remains evident. The company's long-standing reputation for reliability and performance, combined with its commitment to innovation and excellence in service delivery, ensures its status as a leading player in the IT services sector. Investors and analysts will be closely monitoring TCS's trajectory as it adapts to evolving market conditions and strives to maintain its competitive edge in an increasingly dynamic industry landscape.
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