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Muted March To Margin Impact: TCS Wades Through Tariff Uncertainties As Consumer Businesses Take Hit
- Tata Consultancy Services (TCS) faced uncertainty with customers as tariff dialogues intensified from March, causing a shift from near-term optimism to caution.
- The company reported a muted March quarter performance with metrics falling short of analysts' estimates due to client uncertainties impacting discretionary spends.
- Consumer business, especially in the US, experienced pressure and delays in projects attributed to a drop in consumer sentiment and global trade changes.
- TCS saw a decline in operating margin to 24.2% in the fourth quarter, influenced by factors like the completion of a major BSNL order and increased employee expenses.
- Despite challenges, TCS remains optimistic for fiscal 2026 and aims to improve margins through revenue growth and operational efficiency.
- While the BFSI segment showed positive growth, the insurance sector in North America exhibited softness, and demand in the aircraft industry was strong.
- TCS aims to explore opportunities in Europe, particularly in sovereign and private cloud services, despite limited defense exposure.
- The company's total contract value for the quarter stood at $12.2 billion, with a focus on long-term growth despite expected delays and reductions in Total Contract Value (TCV) going forward.
- TCS declares a final dividend for FY25 and remains positive about the long-term outlook, anticipating a better performance in the new fiscal year compared to the previous one.
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