TCS revenue rises 11% as AI work tops 10% of sales and it lines up Porsche and Best Buy deals

Tata Consultancy Services said Thursday that second-quarter revenue rose 11.2% from a year earlier to 73,188 crore rupees, with annualized AI revenue reaching $3.1 billion and crossing 10% of sales for the first time. Net profit was 13,884 crore rupees, and the company announced a planned purchase of Porsche's consulting unit plus a deal for Best Buy's India technology center.

Revenue for the quarter ended Sept. 30 was 73,188 crore rupees, up 11.2% from a year earlier and 1.3% from the prior quarter. In constant currency, sales rose 0.5% sequentially; international revenue rose 1.2% on that basis. Operating margin was 24.0%, and net margin 19.0%. Net profit was 13,884 crore rupees, compared with 12,904 crore a year earlier on the company's figures that exclude exceptional items. Net cash from operations was 14,190 crore rupees, a little more than reported net income.

The Mumbai-based IT services company said annualized AI revenue reached $3.1 billion in the quarter, crossing 10% of total revenue. Banks and financial services, manufacturing, and technology and services led growth. New contract bookings, or total contract value, came to $9.6 billion.

TCS also disclosed two large client moves. It plans a five-year partnership with Porsche AG and, through a subsidiary, the purchase of MHP, Porsche's German management and IT consulting unit — a deal that still needs regulatory approval. Separately, it agreed to take over Best Buy's Global Capability Center in India and turn it into what the companies called an AI Capability Center.

The board declared a second interim dividend of 12 rupees a share, payable Oct. 30 to holders of record on Oct. 14. The workforce stood at 598,056 people, and trailing 12-month attrition in IT services was 13.3%.

Chief executive K. Krithivasan said growth was "broad-based" across international markets and most industries, and that the Porsche and Best Buy deals "represent a new category of transformation partnerships." Chief financial officer Samir Seksaria pointed to "strong cash conversion and industry-leading profitability" while the company kept investing in acquisitions, partnerships and specialized talent.

Where the growth came from

In constant currency, banking and financial services rose 2.5% from the prior quarter, manufacturing 3.1%, and technology and services 3.1%. Consumer business slipped 0.7%. By geography, the UK rose 3.5% and Asia Pacific 2.0%, while North America was up 0.4% and India fell 10.3%.

How the shares traded

TCS shares closed little changed at 2,076 rupees on the National Stock Exchange of India on Thursday, down 0.21% from Wednesday's close of 2,080.30 rupees. The results were filed with the exchanges in the mid-afternoon Mumbai session.