Tata Consultancy Services (TCS) kicked off the first quarter earnings season by reporting an 8.7 per cent increase in net profit at ₹12,040 crore, exceeding the sombre estimates that a gaggle of brokerages had put out.

In the same quarter last year, the software giant had notched up a net profit of ₹11,074 crore.

Analysts were expecting the Tata group flagship to post a net profit in the region of ₹11,900-12,000 crore.

Profits jumped as TCS benefited from some of the mega deals signed in the previous fiscal, with all the markets and verticals reporting a positive show on a sequential basis.

The revenue in rupee terms was also above the estimates of brokerages such as Motilal Oswal which had forecast a topline of ₹62,200 crore.

TCS reported revenues of ₹62,613 crore against ₹59,381 crore a year ago, a jump of 5.44 per cent. In dollar terms, revenues came in at $7.5 billion against $7.2 billion a year ago, a rise of almost 4 per cent.

In sequential terms, revenues rose 1.92 per cent, well above analyst projections of around $7.4 billion.

K. Krithivasan, CEO and MD of TCS, said it was still too early to explicitly say if the sector has hit the growth track.

He reiterated the stance given in the preceding quarter that 2024-25 will be better than 2023-24. “The market conditions remain the same as in last quarter.’’

Order books, however, declined both sequentially and on an annual basis: the total contract value stood at $8.3 billion against $13.2 billion in the preceding three months and $10.2 billion a year ago.

In line with analyst estimates, TCS witnessed a drop in operating margins because of wage hikes.

It stood at 24.7 per cent against 26 per cent in the January-March period.

The North American market showed a decline of 1.1 per cent over the previous fiscal, while Europe grew 6 per cent and Continental Europe 0.9 per cent.

There was very strong double-digit growth in emerging markets led by India which rose almost 62 per cent.

In verticals, banking, financial services (BFSI) witnessed a drop of 0.9 per cent and consumer business by 0.3 per cent, manufacturing showed a strong growth of 9.4 per cent, energy, resources & utilities (5.7 per cent), and life sciences & healthcare at 4 per cent.

The employee count at the end of the quarter stood at 6.06 lakh against 6.01 lakh in the preceding three months. Attrition stood at 12.1 per cent against 12.5 per cent in January-March.

At the board meeting on Thursday, the directors recommended an interim dividend of ₹10 per share.

Ahead of the results, the TCS share finished at ₹3,922.70 on the BSE, up 0.33 per cent.