India's top software exporter, Tata Consultancy Services, will declare its fourth quarter and FY19 earnings on April 12. Key things to watch out for are company's FY20 outlook, BFSI (banking, financial services and insurance) & retail growth, IT budget trends for CY19, growth in digital, outsourcing in Europe, and order wins.
The stock rallied 5.6 percent during the quarter ended March 2019 and surged more than 38 percent in last one year amid strong earnings, rupee depreciation and strong growth in the US & key segments.
Brokerages largely expect TCS to report revenue growth of around 2.5 percent in dollar terms due to cross-currency tailwinds. Constant currency terms revenue growth is expected to be around 2 percent, sequentially.
The revenue growth was driven by strong deal wins, continued growth in BFSI and retail segment.
"We expect the strong demand environment to continue and TCS to deliver 2 percent constant currency revenue growth (2.4 percent in USD terms owing to cross-currency tailwinds)," Edelweiss said.
Prabhudas Lilladher expects constant currency revenue growth of 2.3 percent while Motilal Oswal sees USD revenue growth of 2.7 percent QoQ, on the back of 70bp tailwind from currencies.
Narnolia said BFSI is expected to see strong growth in Q4FY19 led by higher order booking (over $2 billion in Q3FY19) and continued traction from large US banks.
Profit for the quarter is expected to decline in the range of 2-6 percent sequentially while operating margin is likely to be steady or see marginal contraction quarter-on-quarter in Q4.
"Margin is expected to stay honest led by rupee headwinds and investments in the business," Reliance Securities said while Kotak expects stable margins; impact of rupee appreciation will be offset by tightening of operations.
ICICI Securities feels EBIT margins could decline 20 bps QoQ to 25.4 percent mainly on account of rupee appreciation partially offset by operational efficiency.
For FY19, Narnolia expects TCS to post double-digit constant currency revenue growth. However, target margin band of 26-29 percent is difficult to achieve in FY19, it said.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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