TCS to report Q1 results on July 10, all eyes on BFSI, digital commentary

In the quarter ended March 31, TCS reported above company-average growth in all its verticals except BFSI, but CEO Rajesh Gopinathan had said the company was more “optimistic” about the vertical in this financial year.

Analysts will watch for commentary on the demand outlook for calendar 2018 budgets, especially for BFS.

“However, keenly watched will be the commentary on BFS recovery, green shoots of which were cited in the previous quarter,” said analysts at Motilal Oswal in a note to clients.

Kotak Institutional Equities also expects “all verticals, barring banking, will report healthy growth”.

2. Large deal growth

TCS has been performing much better than its competitors in terms of bagging large deals. This quarter TCS announced the expansion of one of its large deals- with M&G Prudential – taking the total deal value to about USD 1.2 billion.

3. Margin outlook:

TCS said last quarter it expects its margin to remain at 26-28 percent, but given increasing protectionism, onsite investments, wage hikes and visa costs, analysts will also look for commentary on how the company plans to maintain its forecast. Most brokerages expect the margin impact to be partially offset by rupee depreciation.

4. Digital business:

TCS and all its industry peers have been talking about the increasing share of the digital business. Digital contributed 23.8 percent of revenue in the March-ended quarter and saw a growth of 42.8 percent on an annual basis.

Analysts at IDBI Capital said they would look at “Growth in digital services and commentary on the ramp-up of recent deals”