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Tata Consultancy Services shares: According to brokerages, TCS' Q1 revenue fell under expectations and the growth outlook for the IT services firm remains hazy.
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TCS' Rs 15,000 crore BSNL contract has fueled its strong growth in the India market in recent quarters, boosting its overall revenue despite a downturn in global demand.
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The focus will remain on demand recovery and generative AI pipeline as rival Accenture recently posted a stellar uptick in interest and revenue from Gen AI projects.
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Brokerages attribute TCS’s likely revenue growth in the September quarter to the ramp-up of deals in North America, BFSI, retail, and, of course, BSNL.
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TCS is scheduled to announce its earnings for the June quarter, on July 11. Despite the revenue uptick, TCS is forecasted to face a 3.5 percent dip in net profit for Q1 FY25, settling at approximately Rs 11,999 crore.
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While some analysts and investors are still digesting the data and reading between the lines, here is a handy summary of the key trends which shaped India Inc’s Q3 show.
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Among major corporates that have announced their December quarter earnings, so far, Indian Oil Corporation has clocked the biggest year-on-year jump in net profit at a whopping 1,071 percent
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The Nifty IT index is grappling to overcome the selling pressure emerging around the 36,000 mark. This hurdle must be surpassed to enter the next leg of upside, as per experts.
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The Q2 report cards of India’s biggest IT firm, biggest private bank and largest NBFC have a clear message for investors – size can be a double-edged sword.
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Deal wins were robust across the board but the overall macroeconomic environment remains shaky in the major markets of the US and EU
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Elara Capital, a domestic brokerage firm, suggests that tepid spending in North America and the impact on old managed services deals may dampen momentum. North America is a major customer for the IT giant.
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Q2 Earnings: While the IT sector has witnessed an uptick in order inflow over the past two months, the slowdown in project-based business is expected to hamper overall industry growth.
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In their previews, brokerage firms have pointed out that decreased discretionary spending, wage hikes and companies prioritising long term deals due to recession fears in the North American market have impacted notably TCS and some of the other Tier-1 companies’ margins.
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The company is likely to report a 2.8 percent quarter-on-quarter growth in revenue while net profit is expected to increase by 6.5 percent QoQ
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Analysts expect constant currency growth of 1.9 percent on a quarterly basis
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Net Sales are expected to increase by 3.4 percent Q-o-Q (up 15.2 percent Y-o-Y) to Rs. 52,320 crore, according to Motilal Oswal.
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Kotak expects Infosys to maintain full year revenue growth guidance at 12-14 percent in constant currency terms and the EBIT margin band at 21-23 percent.
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Growth in total contract values and margins likely to remain flat sequentially. Headwinds from high inflation in the US and Europe and backfilling likely to be offset by scale and efficiencies.
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Management commentary on large deals pipeline and deal closures would be important to gauge confidence on growth continuity and better predictability, says Emkay Global.
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Total contract values are expected to be little changed on a sequential basis. Supply-side challenges remain, but the demand outlook remains strong
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Net Sales are expected to increase by 4 percent Q-o-Q (up 16 percent Y-o-Y) to Rs. 48,611 crore, according to Arihant Capital.
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Net Sales are expected to increase by 3.2 percent Q-o-Q (up 15.2 percent Y-o-Y) to Rs. 48,382.9 crore, according to ICICI Direct.
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Healthy deal flows are likely to drive revenue growth even though December is generally a lean month due to year-end holidays
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The pandemic both disrupted business for India’s IT companies and opened up new opportunities as the need for digitisation grew globally. Deals, clients and hiring were among the key trends that shaped their performance in the quarter ended September.
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Management guided that demand environment is strong and is sustainable over the medium term.
