TCS Q3 Results Preview: Analyst Sees Low Double-Digit Sales Growth, Cautious Outlook
TCS is expected to report low double-digit sales growth for the quarter ended December 2022 as global economic headwinds continue.
Tata Consultancy Services could adopt a more measured tone with its growth outlook for the next 12 months as it kicks off earnings season on Jan. 9, said Bloomberg Intelligence’s Anurag Rana. The downtrend will be on the account of rate hikes across the world and inflationary pressures weighing corporate technology spending budgets, he wrote.
Muted earning from Tata’s software arm will set the tone for the Indian IT sector as well, Rana said. Domestic software exporters, who receive a significant chunk of their revenue from North America and Europe, will suffer the consequences of economic upheavals in the regions.
The analyst expects the Indian IT bellwether to report low double-digit sales growth for the quarter ended December 2022 as global economic headwinds continue.
“Europe, which accounts for over 30% of TCS’s revenue, is likely to see most of the slowdown,” Rana said.
He expects the revenue from the continent coming to TCS to drop to mid-single digits from an average of 15% growth over the last 12 months.
TCS is expected to report a revenue of Rs 57,199.46 crore for the quarter ended Dec. 31., 2022, Bloomberg estimates show. The company is expected to report EBIT of Rs 14,071.78 crore, and EBIT margin of 24.6%. The net profit for the recently concluded quarter is expected to be at Rs 11,074.50 crore, as per Bloomberg estimates.
As per Bloomberg data, 23 of 50 analysts have given a buy rating to TCS, while 16 have a hold rating for the scrip. Eleven analysts have a sell rating on the stock. The target price of the TCS stock over the next 12 months is Rs 3,448.
The TCS stock is expected to rise 2.2% a day after announcing its financial results, according to Bloomberg. The stock was down 2.97% at Rs 3,212 on BSE, against a fall of 0.75% in Sensex at 59,900.37.