TCS hits record high ahead of Q1 results

Moneycontrol Bureau

Shares of India's largest software services exporter Tata Consultancy Services hit a record high of Rs 1,692.30 on NSE in morning trade on Thursday, ahead of its first quarter earnings announcement later today.

Trading was, however, volatile and at 11:30 hrs, the stock was down 0.8 percent at Rs 1,665.70.

The Tata group company will announce its earnings for the April-June quarter after market hours. Analysts on average expect the company to report a net profit of Rs 3,787 crore, up 5 percent quarter-on-quarter, according to a CNBC-TV18 poll. Quarterly revenue is seen up 8 percent sequentially to Rs 17,705 crore. US Dollar revenus is expected to rise a little over 3 percent to USD 3.14 billion.

Expectations on the street will be running high for Mumbai-based TCS to deliver, especially since, its main rival Infosys last week beat street expectations with a 4 percent year-on-year (1 percent sequential dip) in net profit at Rs 2,374 crore, and a revenue growth of 17 percent YoY (8 percent QoQ) to Rs 11,267 crore.

TCS' subsidiary CMC, earlier this week, reported a consolidated net profit of Rs 53 crore, down 9 percent year-on-year, due to a higher tax outgo.

Also Read: CMC targets to grow ahead of the IT industry

"TCS commentary could indicate a stable but back-ended year for revenues and higher investments in low-margin, large deals to absorb the tailwind of rupee depreciation," Morgan Stanley analysts Vipin Khare and Gaurav Rateria say.

Citigroup's Surendra Goyal and Rishi Iyer expect TCS to report flattish margins and tailwinds of currency and lawsuit settlement will be offset by wage hikes and investments, they say.

Nimish Joshi of CLSA says the company will continue its solid financial performance, but there is limited potential for earnings upgrade and re-rating precluding any significant stock upside.

Also Read: Analysts raise Infosys earnings estimates after strong Q1