TCS Q4 preview: modest growth expected amid seasonal weakness

tcs

Tata Consultancy Services (TCS), one of India's bellwether IT services companies, will announce its Q4 FY25 earnings on April 10. Brokerages expect a muted quarter, with a sequential revenue decline anticipated, primarily due to seasonal factors such as fewer billing days, softening demand, and project delays.

According to an average of four brokerage estimates polled by Moneycontrol, TCS is likely to report a modest 5 percent year-on-year rise in revenue to Rs 64,840 crore, while net profit is expected to inch up 1.4 percent to Rs 12,554 crore. EBITDA is projected at Rs 17,154 crore.

In constant currency (CC) terms, revenue is expected to decline quarter-on-quarter, primarily due to a reduction in BSNL-related revenues. While the BFSI (Banking, Financial Services and Insurance) vertical is expected to drive growth, segments such as manufacturing, retail, and healthcare are likely to remain subdued.

Margins may see only a small improvement of 30 basis points quarter-on-quarter, as talent investments, re-skilling efforts, and employee promotions offset benefits from operational efficiency and rupee depreciation.

What factors are driving the earnings?

Flat International Revenue: Analysts forecast flat constant currency revenues for international markets, alongside a ~$30 million decline in BSNL revenue, weighing on overall performance.

Limited Margin Expansion: Rupee depreciation is unlikely to materially improve margins, as internal cost pressures from talent-related expenses continue.

Deal Momentum: Deal wins are expected to remain steady between $10 billion and 11 billion. However, large deal closures are likely to be subdued, reflecting caution among global enterprises—especially in discretionary and digital transformation projects.

Enterprise Priorities: Cost optimisation remains a top priority amid ongoing macroeconomic uncertainties including tariff wars.

What to look out for in the quarterly show?

Key monitorables this quarter include CY25 client budgets, pricing trends, and any project delays or recovery signs. Investors will also track discretionary spend recovery beyond BFSI and the impact of GenAI-led automation on pricing and volumes.

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