Analysts are anticipating a 2.8-4 per cent sequential growth in sales and 5-10 per cent QoQ growth in profit. The company’s revenue in dollar terms and constant currency terms are expected to beat key peers on a sequential basis. Unlike peers, TCS had already absorbed wage revision in the December quarter, but select brokerages believe the margin could get impacted by the recent onsite-centric large deals.
Investors should watch out for large deal wins, outlook on client spending trends and levers to defend or improve margins in the backdrop of certain supply side concerns, analysts said.
Motilal Oswal pegs TCS’ dollar revenue sequential growth at 4 per cent, highest among top 5 IT firms. Its constant currency revenue growth assumption for TCS at 3.4 per cent QoQ is also highest among top 5 firms.
In rupee terms, it sees a sequential revenue growth of 2.8 per cent (8.2 per cent YoY) at Rs 43,200 crore. Profit is seen rising 9.6 per cent QoQ (18.2 per cent YoY) to Rs 9,600 crore.
In its results preview, JM Financial anticipated TCS’ sequential revenue growth at 4.2 per cent on constant currency terms. The March quarter growth, it said, would be aided by the full quarter consolidation of Pramerica Ireland and Postbank consolidation.
“We expect Ebit margin to decline 40 bps sequentially due to consolidation impact of the two large onshore takeover deals and slight rupee appreciation,” the brokerage said.
TCS ended at Rs 3,322.20, up 0.17 per cent on BSE on Friday.
Kotak Securities expects strong 4.2 per cent CC revenue growth on a sequential basis, driven by ramp up of Postbank and Prudential Financial deals. The deals are likely to contribute nearly 2 per cent to March quarter revenues.
“Continued spending by clients on digital priorities and large deal ramp up will drive strong growth. On profitability, we expect Ebit margin to increase sequentially powered by leverage from growth and increase in utilisation rates. We note that TCS absorbed the impact of wage revision in the December quarter and does not have any incremental headwinds in the March quarter. We believe that TCV of deals will be robust aided by core transformation and digital deals.,” Kotak said.
While TCS does not guide, the management may express confidence on achieving comfortable double digit growth in FY2022 and sustained profitability, Kotak said.
