Tata Consultancy Services Ltd. is expected to report modest revenue growth in the June quarter, while margin and profit are likely to come under pressure from the full-quarter impact of wage hikes amid an uncertain demand environment. The country's largest software exporter is scheduled to announce its first quarter results on June 9.
Bloomberg estimates point to a 1% quarter-on-quarter increase in revenue, while operating profit is expected to decline 3% and net profit 2%. Revenue in constant currency terms is projected to grow 3.58% year-on-year, while employee attrition is seen rising to 11.5%.
TCS Q1 Preview (Consolidated, QoQ, Bloomberg Estimates)
- Revenue seen 1% higher at Rs 71,743 crore versus Rs 70,698 crore
- EBIT seen 3% lower at Rs 17,284 crore versus Rs 17,870
- EBIT Margin seen at
- Profit seen 2% lower at Rs 13,485 crore versus Rs 13,718 crore
Analysts broadly expect growth to remain subdued as macro uncertainty and delayed client decision-making continue to weigh on discretionary spending.
The June quarter is expected to reflect the impact of wage revisions, while the second phase of the BSNL project is yet to contribute meaningfully to growth. Investors will focus on demand trends across key verticals, particularly BFSI, updates on large deal wins, management commentary on geopolitical developments, and the company's strategy around artificial intelligence investments and deployment.
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Here's what analysts are expecting from TCS Q1 results:
IIFL
- Expects 0.6% quarter-on-quarter constant currency growth, including contribution from the Coastal Cloud acquisition.
- Does not expect a meaningful ramp-up of the second phase of the BSNL project.
- EBIT margins likely to contract by about 100 basis points due to the full-quarter impact of wage hikes, with currency gains reinvested into the business.
- Key focus areas include demand across verticals, geopolitical developments, BSNL ramp-up, margin levers and AI data centre investments.
Dolat Capital
- Expects 0.4% quarter-on-quarter constant currency revenue growth.
- Operating margin expected to decline by about 57 basis points as the wage hike impact is only partly offset by operational efficiencies and currency gains.
- Monitorables include demand commentary, the impact of the West Asia conflict, deal wins and AI services contribution.
HSBC
- Expects 0.5% quarter-on-quarter organic constant currency growth.
- Sees a 40-basis-point cross-currency headwind.
- Margins expected to weaken sequentially because of wage hikes.
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UBS
- Expects broadly flat growth as delayed client decisions and deal deferrals weigh on most verticals.
- Margins expected to decline due to wage hikes, with currency and operational efficiency benefits reinvested into the business.
Nuvama
- Expects 0.1% quarter-on-quarter constant currency revenue growth.
- Growth likely to remain modest as macro headwinds persist and the BSNL extension deal has not started contributing.
- Margins expected to decline by about 160 basis points due to the full-quarter wage hike impact, partly offset by currency tailwinds.
- Key focus areas include the US macro outlook and BFSI growth.
Jefferies
- Expects 0.2% quarter-on-quarter constant currency revenue growth, including about 20 basis points of inorganic contribution.
- Does not expect any contribution from the second phase of the BSNL project.
- Margins expected to decline by about 120 basis points due to wage hikes, partly offset by rupee depreciation.
- Deal wins expected in the $9 billion-$10 billion range.
- Focus areas include demand in BFSI, North America and Europe, BSNL ramp-up, AI impact on growth, FY27 outlook and AI strategy.
Citi
- Expects around 0.3% quarter-on-quarter constant currency revenue growth despite a cross-currency headwind.
- Margins expected to decline by about 110 basis points due to wage hikes, partly offset by rupee depreciation.
- Deal total contract value expected to be around $10 billion.
- Key focus areas include demand outlook, margin trajectory, deal wins, and trends in the BFSI and retail verticals.
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