TCS to announce Q2 earnings on October 12; here's what to expect

Tata Consultancy Services, the country's largest software services provider, will announce its July-September quarter earnings on October 12 after market hours.

Profit after tax for the quarter is expected to increase 4 percent sequentially to Rs 6,183 crore and revenue may grow 2.6 percent to Rs 30,356 crore, according to average of estimates of analysts polled by CNBC-TV18.

Revenues in dollar terms are likely to register a 3 percent at USD 4,731 million in the quarter ended September 2017, compared with USD 4,591 million in previous quarter.

Analysts expect constant currency revenue growth at 1.5-2 percent as soft BFS (banking and financial services) business in North America and industry wide challenges in the retail could be key headwind.

Earnings before interest and tax (EBIT) may grow 0.8 percent quarter-on-quarter to Rs 7,467 crore and margin may expand 110 basis points to 24.5 percent in Q2FY18.

Analysts see positive cross currency impact of 80-130 basis points and expect margin to improve on account of lack of wage hikes and visa cost for the quarter.

They expect lower other income in September quarter due to company's Rs 16,000 crore worth of share buyback.

Key things to watch for would be:-

> Commentary on client budgets and digitalisation

> Outlook of BFSI and retail

> Outlook on insurance especially Diligenta. After Q1 earnings, the company said it expected large insurance deal closure in Q2 and ramp up in second half of FY18

> Growth in telecom & healthcare businesses

> Outlook on margins (guidance 26-28 percent)

> Progress on large deals and pipeline

> Dividend payout if any. TCS had indicated its intention to payout at least 80 percent of free cash flow.

The stock price has been stuck in Rs 2,400-2,500 range over the last 6 months.

Its Q1 was a muted quarter, with constant currency growth at 2 percent.