TCS shares close 1% higher after Q1 earnings beat; valuation zooms ₹7,706 cr

Shares of TCS ended 1 per cent higher on Friday after the country's largest IT services company reported a 4.61 per cent increase in its June-quarter net profit, and guided towards an improvement in demand impacted by the West Asia crisis, returning in the ongoing quarter.

The bellwether IT stock ended at ₹2,069.05, up 1.04 per cent on the BSE. During the day, it jumped 4.11 per cent to ₹2,132.

At the NSE, shares of the firm ended 0.95 per cent higher at ₹2,069. Intraday, shares of the company climbed 4 per cent to ₹2,133.30.

The company's market valuation climbed ₹7,706.53 crore to ₹7,48,600.40 crore.

TCS on Thursday reported a 4.61 per cent increase in its June-quarter net profit to ₹13,349 crore.

Other IT stocks -- Infosys, HCL Tech, Tech Mahindra and Wipro -- also ended in positive territory, adding significantly to the market's rally.

The BSE IT index jumped 2.01 per cent to end at 27,211.93.

The 30-share BSE Sensex jumped 827.57 points, or 1.08 per cent, to settle at 77,569.39. The 50-share NSE Nifty surged 244.10 points, or 1.02 per cent, to end at 24,206.90.

"Better-than-expected earnings from Tata Consultancy Services (TCS) lifted sentiment across the IT sector," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.

In the results that come amid heightened worries over the sustenance of growth in the $315 billion domestic IT sector in the age of artificial intelligence, TCS said its net income rose 8.5 per cent year-on-year to ₹13,849 crore if one were to exclude exceptional items.

The company's managing director and chief executive, K Krithivasan, said the demand environment remained sluggish during the reporting quarter amid ongoing conflicts and noted that Q1 also saw some clients deferring work. However, even though the conflicts continue, he sounded more sanguine.

"We are still optimistic that the demand will resume sometime in Q2 primarily because our customers have a significant amount of pent-up technology backlog to be completed," he said on a call with analysts.

From a topline perspective, TCS' revenues jumped by nearly 14 per cent year-on-year to ₹72,275 crore in the June quarter and were up 2.23 per cent against the March quarter's ₹70,698 crore. It reported an annualised AI revenue of $2.6 billion, which was up 13.6 per cent quarter-on-quarter.

Krithivasan said the quarter reflects continued growth momentum and the strength of our strategic positioning, despite geopolitical and macro-economic headwinds.

"As customers accelerate investments in AI, modernisation, cybersecurity, sovereign cloud and platform simplification, our strong deal conversion, improving client mining and expanding ecosystem partnerships position TCS well to translate opportunity into sustained growth," Krithivasan added in a statement.