TCS Q1 Results Preview: Key Things To Watch

The profit of India’s largest IT services firm likely remained under pressure in what is traditionally the strongest quarter for the $245-billion industry.

EBIT margin of TCS may have likely contracted 90 basis points sequentially, primarily due to salary hikes, in the April-June quarter, according to Nirmal Bang. Higher travel, facilities, and sales and marketing costs weighed on profitability but might have been offset by higher utilisation, pyramid benefits, and lower subcontracting costs.

At 38%, the IT bellwether’s outsized revenue exposure to financial services is another pain point, according to Nomura. The slowdown in the BFSI vertical, following the regional bank crisis, likely created a headwind in this vertical in Q1 FY25. The fact that these lenders are still shy on IT spends despite record profits has the brokerage cautious.

But TCS now has a BFSI veteran at the helm. Krithi Krithivasan, who has been with India’s largest IT services firm for 34 years, will address his first earnings presentation today. His strategic direction for the vertical and demand commentary on the overall business will be keenly watched, especially when all of FY24 is seen as a washout.