TCS Q2 Results Preview: Margin Seen Steady As FX Gains Offset Wage Hike Impact; H-1B Commentary In Focus

Tata Consultancy Services Ltd. will report its quarterly results for the three months ended September on Oct. 9, with analysts closely watching the impact of the new H-1B visa fee, which imposes a $100,000 charge on new petitions. Brokerages expect margin to remain largely steady as the BSNL ramp-down impact fades and foreign exchange gains support earnings.

Revenue is expected to rise slightly, while the benefit to margin from FX gains and a stabilising BSNL base is likely to be partly offset by wage hikes effective from September.

This quarter is particularly significant because of the new H-1B visa fee, which imposes a $100,000 charge on new petitions. TCS is one of the largest H-1B visa recipients among Indian IT companies, making the fee increase a key factor in its cost structure.

Analysts are also watching for commentary on demand outlook, restructuring and headcount trends, particularly across BFSI, North America and Europe.

TCS is expected to report a revenue increase of 1% to Rs 65,206 crore from Rs 63,437 crore in the previous quarter, according to analysts consensus estimates tracked By Bloomberg. Meanwhile, profit is projected to increase 6% to Rs 12,568 crore from Rs 12,760 crore.

• Revenue seen 1% higher at Rs 65,206 crore versus Rs 63,437 crore

• Profit seen 6% higher at Rs 12,568 crore versus Rs 12,760 crore

• EBIT seen 3% higher at 15,998 crore versus Rs 15,514 crore

• EBIT margin seen at 24.53% versus 24.45%

Here’s what analysts are expecting from TCS Q2 results:

• Margin expected to remain largely stable quarter-on-quarter, aided by FX gains and top-line growth, partly offset by the September wage hike.

• Commentary on H1-B visa policy and headcount will be closely watched.

• Q2 growth is expected to be better than Q1 as BSNL ramp-down impact is now fully reflected in the base.

• Revenue is expected to grow 0.4% QoQ in constant currency, led by international markets, partly offset by the BSNL ramp-down.

• Margin seen improving slightly, supported by BSNL normalisation and rupee depreciation, partly offset by the wage hike.

• Deal wins are expected between $7 billion and $9 billion.

• Key focus areas: BFSI demand, restructuring impact, BSNL phase-two ramp-up, H1-B visa fee hike, AI adoption and JLR cyberattack implications.

• Constant-currency revenue could remain flat sequentially, supported by growth in energy, utilities, hi-tech and financial services.

• Margin benefits from FX and restructuring may be offset by lower utilisation due to JLR project delays.

• Key monitorables: deal pipeline conversion, performance in financial services, retail, and manufacturing verticals, and large deal ramp-ups.

• Revenue is expected to decline 0.5% sequentially in constant currency, mainly due to a smaller contribution from BSNL.

• Developed markets are expected to see modest growth.

• EBIT margin is expected to remain largely flat, partly offset by the effect of salary hikes.

• Deal wins are projected between $7 billion and $9 billion, excluding mega deals.

• Analysts are monitoring restructuring impact, discretionary spending, and cost takeout projects.

• Growth is expected to remain muted as gains in BFSI and technology are offset by weakness in life sciences, healthcare, and communications.

• A 10 basis-point cross-currency headwind is factored into revenue estimates.

• Operating margin expected to improve only marginally, with FX gains offset by wage hikes.

• Analysts are tracking US demand guidance, deal conversion rates, AI-related pricing, and discretionary spending trends.