TCS likely to report profit growth, margin improvement in Q4FY24, shares slip

TCS’ plans for hiring in FY25 will be watched by investors. Though in FY24 there were delays in campus hiring, the company has already announced fresher hiring tests for FY25.

Shares of Tata Consultancy Services (TCS) slipped half a percent in morning deals on April 12 ahead of the company reporting its earnings for the quarter ended March 31, 2024 (Q4FY24).

The IT giant's revenue in rupee terms is expected to rise 1.5 percent quarter-on-quarter to Rs 61,414 crore, according to an average of 10 brokerage estimates.

Its net profit for the quarter may rise 5.8 percent sequentially, showed the poll. Among the Tier-I tech companies, TCS is expected to be best positioned to drive revenue growth.

TCS, aided by the BSNL deal ramp-up, will likely lead the growth,” said a Jefferies report. TCS's EBIT margin for the quarter is seen improving to 25.3 percent. According to analysts at Sharekhan, the margin improvement will be driven by better utilisation and lower sub-contracting expenses, offsetting lower margins from the BSNL deal.

Also Read | TCS Q4FY24 earnings preview: Top five factors at play

The TCS' deal wins will be a key monitorable. While the IT services major has not reported any mega deals in the January-March quarter, it did bag a bunch of multi-year, multi-million-dollar deals from Aviva, Ramboll and the Central Bank in the US. Overall, analysts are expecting a good order book.

TCS' hiring plans and furloughs will be watched keenly as in the previous quarter, the company's headcount dropped by 5,680 on a net basis. However, it maintained that it is on track to hire 40,000 freshers as planned for FY24. The reversal of furloughs in Q4FY24 is expected to aid TCS’ business.

TCS’ plans for hiring in FY25 will be watched by investors. Though in FY24 there were delays in campus hiring, the company has already announced fresher hiring tests for FY25.

Also Read | TCS Earnings Preview: Q4 revenue to ride on deal wins; margin, profitability to improve

On April 10, TCS shares closed at Rs 3,980.75 on the National Stock Exchange (NSE), up 0.8 percent from the previous close. So far this year, the stock has moved 4.5 percent higher, in line with the 4.6 percent rise seen in benchmark Nifty 50 index.

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