TCS Q1 PAT seen down 5.7% at Rs 2264 cr

India's largest software services exporter Tata Consultancy Services (TCS) is expected to report 5.7% fall in the profit after tax of Rs 2,264 crore in the quarter ended June 2011 as against Rs 2,402 crore in previous quarter, as per US GAAP.

In dollar terms, revenues are likely to go up by 6.28% to USD 2,385 million from USD 2,244 million and in rupee terms, revenues are seen going up by 5.09% to Rs 10,674 crore from Rs 10,157 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to decline marginally to Rs 3,040 crore from Rs 3,073.8 crore and EBITDA margin is seen at 28.5% - lower as compared to 30.26% in previous quarter.

EBIT is likely to go up at Rs 2,855 crore versus Rs 2,845 crore while EBIT margin is seen at 26.7% versus 28% on quarter-on-quarter basis.

Infosys EBIT margin stood at 26.1% - if TCS beats that it will be for the first quarter that TCS beats Infosys in margins. In fourth quarter FY11, Infosys margin was 29% as against 28% for TCS - the closest in terms of difference.

TCS has been beating Infosys in volume performance for a while now.

Watch out for

-Commentary on deal pipeline, which has been strong. In Q4, it won 7 deals across verticals
-Target utilization rate at 82%-84%. TCS has been consistently operating in the 82-84% range for the past four quarter (high compared to industry - e.g. Infosys at 74.9%).
-FY2012 BFSI revenue growth could be similar to FY11 growth of 28.3%. (BFSI vertical contributes about 44% to TCS