Markets await TCS Q4 earnings on April 19; Here's what to watch for

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26 Aug, 2025 12:21

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Tata Consultancy Services, India’s largest IT services exporter, will announce its fourth quarter and annual results on Thursday, nearly a week after its closest rival Infosys forecast margins that disappointed investors.

While TCS does not give revenue or profit guidance for the coming quarter or the full year, the company does talk about operating margin expectations for the full year. Here are a few things the Street would watch for in TCS earnings:

1. Revenue growth:

Analysts expect TCS to report between 1.1 percent and 2.0 percent revenue growth in constant currency, sequentially, helped by some of its recent large deal wins including Marks & Spencer, and life insurance provider Transamerica. Growth will be aided by ramp-up of some of these deals.

According to a Reuters poll, analysts on average expect TCS to post fourth-quarter net profit of Rs 6,811.8 crore and revenue of Rs 31,669.2 crore.

2. Margin outlook:

TCS had said last year that it expects margins to be between 26 percent and 28 percent. Given the ongoing cost pressures, including reduced H-1B visas and increased local hiring in the US, margins have been pressured. In the quarter ended December 31, TCS reported operating margin of 25.2 percent.

Commentary on operating margins will be keenly watched.

3. BFSI commentary:

The banking, financial services and insurance vertical, which accounts for nearly a quarter of TCS’ overall revenue, has been slow in the past year. There is positive commentary around the sector, including from Infosys last week. However, TCS counts large banks as its customers, several of whom are putting their IT spend into captives and insourcing.

Hence, the comments around demand outlook in the sector is another key issue to watch out for.

4. Europe outsourcing:

Over 50 percent of TCS’ revenue last quarter came from the United States. Europe revenue is divided into United Kingdom and Continental Europe. As growth in the US market slows, analysts have said outsourcing in Europe will continue to outgrow North America. What TCS has to say around demand from Europe will also be an area of interest.

5. Impact of US tax code:

The US tax cut Bill is expected to incentivise investments in the US and in the long run, be positive for Indian IT companies. TCS is seen as a beneficiary of the new Bill, and the Street would look for more clarity on this.