TCS Share Price In Focus Ahead Of Q3 Results
Shares of Tata Consultancy Services Ltd. are in focus ahead of its December-quarter earnings, with Bloomberg estimates suggesting that headline growth is masking continued pressure in constant-currency terms due to the lingering impact of the BSNL ramp-down.
While the December quarter is seasonally weak because of fewer billing days, analysts say delays and deferrals have eased compared with earlier periods. The quarter is expected to show improving execution in select verticals, although margins will be shaped by the two-month impact of wage hikes for junior employees, furloughs and restructuring-related expenses.
Expected Q3 Performance
Revenue is expected to be 2% higher at 66,849 crore versus Rs 65,799 crore. EBIT is seen 8% higher at Rs 16,732 crore versus Rs 15,430 crore. EBIT margin is seen expanding to 25.02% versus 23.45%. Profit is seen 8% higher at Rs 13,006 crore versus Rs 12,075 crore.
Investec expects 0.8% quarter-on-quarter growth in constant currency and 0.5% growth in US dollar terms, as delays and deferrals ease and a potential turnaround emerges in the communications, media and entertainment vertical. EBIT margins are expected to be impacted by the two-month wage hike for junior employees, while severance costs are likely to be treated as a one-off below the EBIT line.
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Analysts’ Expectations
Jefferies forecasts 0.5% quarter-on-quarter constant-currency revenue growth, driven by international markets, with no contribution from the BSNL deal. Margins are expected to rise by 50 basis points, aided by headcount reduction and rupee depreciation, partly offset by wage hikes and furloughs.
UBS expects growth to remain impacted by the BSNL ramp-down. Margins are seen declining slightly due to furloughs, partly offset by rupee depreciation. Deal wins are also expected in the $7 billion to $9 billion range.
Nuvama expects 0.5% quarter-on-quarter constant-currency growth and 0.2% growth in US dollar terms, driven by developed markets as execution on the BSNL extension deal has not started. Margins are likely to decline by about 60 basis points due to the two-month wage hike impact.
Key Watch Points
Key watch points include the US macro outlook and updates on employee restructuring. For more information on US macro outlook and its impact on the Indian stock market, visit our website.
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Conclusion
In conclusion, TCS share price is in focus ahead of its Q3 results. The company’s performance is expected to be impacted by the BSNL ramp-down and wage hikes. Investors can consider various investment strategies to maximize their returns. For more information on Indian stock market trends and news, visit our website.