The Tata Consultancy Services building. (Source: Company PR)
1 year ago
Oct 10, 2024
India's largest IT firm Tata Consultancy Services Ltd., state-owned Indian Renewable Energy Development Agency Ltd. and Tata Elxsi Ltd. will kick-start India Inc.'s earnings season for the second quarter on Thursday. As many as 12 companies, are set to announce their quarterly results for the three-month period ending September 2024.
As on Sept. 30, TCS had applied for 8,354 patents, including 160 applied during the quarter and been granted 4,369 patents including 223 granted during the quarter.
"Our longer-term cost structures remain unchanged, and we remain confident in our ability to continue delivering industry leading profitable growth," Samir Seksaria, Chief Financial Officer TCS.
"We welcomed 11,000 associates in the first half of the year," said Milind Lakkad, Chief HR Officer - TCS. He also said that the company is on track for trainee onboarding. The tech giant has also commenced the campus hiring process for financial year 2026, according to the exchange filling.
Thirty out of the 47 analysts tracking Tata Consultancy Services have a 'buy' rating on the stock, 10 suggest a 'hold' and seven have a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 5.6%.
TCS is likely to clock a net profit of Rs 12,543 crore and revenue of Rs 64,186 crore for the quarter ended September, according to a survey of analysts' estimates done by Bloomberg.
Tata Consultancy Services Ltd. said that it had onboarded 11,000 trainees in the quarter-ended June and will hire 40,000 employees for the year ending March 2025.
The headcount of India’s largest software services exporter rose by 5,452 to 6,06,998 in the first quarter. Its headcount fell by 13,249 in FY24. Attrition dipped to 12% in Q1 as compared to 12.5% a quarter ago.
Milind Lakkad, chief human resources officer of TCS, said in the Q1 earnings call that attrition will stabilise in the second quarter. “Trainees are a key strategy for talent development for TCS, and that will continue this year,” he said. “The net headcount every quarter will be difficult to call out because it depends on various factors.”
TCS is likely to clock a net profit of Rs 12,543 crore and revenue of Rs 64,186 crore for the quarter ended September, according to a survey of analysts' estimates done by Bloomberg.
Here are the key factors to watch out for in their earnings update:
Reason for the absence of growth, excluding India.
Qualitative commentary for margin and growth guidance.
TCS stock rose as much as 0.87% during the day to Rs 4,290 apiece on the NSE. It gave up gains to trade 0.63% lower at Rs 4,226.3 apiece, compared to a 0.24% advance in the benchmark Nifty 50 as of 1:19 p.m.
It has risen 16.4% during the last 12 months and has advanced by 12% on a year-to-date basis. The relative strength index was at 42.
Thirty out of the 47 analysts tracking the company have a 'buy' rating on the stock, 10 suggest a 'hold' and seven have a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 5.6%.
Tata Consultancy Services reaffirmed its commitment to achieving a margin above 26%, despite experiencing its first contraction in four quarters during the April-June period.
The company aims to maintain margin levels of 26-28%, Chief Financial Officer Samir Seksaria told reporters, adding that margins will increase quarter by quarter. The company last achieved a margin of more than 26% during the fourth quarter of the financial year ending March 2021.
India's largest software services provider reported an EBIT margin of 24.7% for the first quarter of the financial year, down from 26% in the previous quarter. Analysts tracked by Bloomberg had estimated a margin of 24.5%.
GM Breweries Ltd.'s net profit declined in the second quarter of fiscal 2025.
The net profit of the company fell 3.1% year-on-year to Rs 21.7 crore in the quarter ended September. This compares to a profit of Rs 22.4 crore in the same period last year.
Revenue rose 0.2% year-on-year to Rs 149 crore in the July-September quarter.
Operating income, or earnings before interest, taxes, depreciation, and amortisation, fell 7,4% year-on-year to Rs 27.5 crore. The Ebitda margin contracted to 18.5% from 19.6% in the previous year.
TCS management, while talking to analysts about July-Sept guidance, said that they expect the second quarter to be soft. The growth and deals won in the first quarter are likely fizzling out, according to the management, and that added that the business in North America and BFSI is in bit of struggling mode.
Indian IT companies conduct substantial business with American firms, thus, making them vulnerable to the US economic environment.
Discretionary demand trends and the green shoots especially in the banking space would be in focus as they contribute to majority of IT companies' revenues.
Even as the July-September period tends to be a strong quarter for the sector, analysts expect TCS to be a laggard, while Infosys Ltd. and LTIMindtree Ltd. are seen leading revenue growth.
The market could find it difficult to support the current valuations of the IT sector, according to CLSA
Tata Consultancy Services Ltd. has cancelled its September quarter earnings press conference and interviews scheduled later on Thursday after the demise of Ratan Tata.
The IT giant, however, will release the Q2 financial results and analyst call on Thursday, Oct. 10, after the board meeting, as decided earlier.
Legendary industrialist Ratan Tata, who served as the chairman of the Tata Group from 1991 to 2012, died on Wednesday at the age of 86.
The scrip of Tata Investment Corp. rose by over 12% in early trade while TRF Ltd. surged 10% on Thursday. Shares of Tata Chemicals Ltd., Tata Elxsi Ltd., and Tata Technologies Ltd. were up by over 3%, each. This compares to a 0.5% advance in the benchmark Nifty 50 as of 10:09 a.m.
The share price of Trent Ltd., and Tinplate Company of India Ltd., declined slightly in trade on Thursday.
