Tata Consultancy Services Ltd. will kick off the second-quarter earnings season on Wednesday.
The net profit of India's biggest IT services firm is likely to have risen in the July–September period amid flat revenue growth, according to Bloomberg estimates.
Here are five things to watch out for in TCS' Q2 results:
1. Revenue Growth
TCS is likely to clock a revenue of Rs 60,353 crore as compared with Rs 59,381 crore in the first quarter, according to Bloomberg. Net profit is expected to rise 3% sequentially to Rs 11,409 crore.
Essentially, TCS is staring at another subdued quarter. Investors will look for cues from the management on how the rest of the fiscal will pan out.
2. Dealmaking
TCS signed some mega deals in the second quarter—$800 million from Jaguar Land Rover and $1.1 billion from the U.K.'s National Employment Savings Trust.
The order book for the second quarter is estimated at $11–13 billion. But discretionary deals are still hard to come by. The deal pipeline—though healthy—isn't meaningfully converting into revenue.
3. Return To Office
TCS, which is India's biggest private employer, wants all employees to return to the office, marking an end to working from home. While that could aid utilisation levels, overhead costs will also go up.
4. Hiring Plans
In the first quarter, TCS had a net headcount addition of 523 people, while its peers—Infosys Ltd., HCL Technologies Ltd., and Wipro Ltd.—recorded a decline in headcount.
TCS is unlikely to step up hiring at this juncture of the fiscal and will look to make the most of its bench strength.
5. Buyback
The TCS board will also consider a share buyback—its fifth in six years—which can potentially be its biggest ever.
In March 2022, the company repurchased shares worth Rs 18,000 crore. This time, it can easily go up to Rs 22,000 crore.
Shares of TCS closed 0.22% lower at Rs 3,629.20 apiece on the BSE as compared with a 0.87% advance in the benchmark Sensex on Tuesday.
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