TCS likely to report weak numbers in Q4 earnings, retain margin guidance
India’s largest IT player Tata Consultancy Services (TCS) is projected to report a 1.85 per cent sequential growth in dollar revenue at $4,468 million for the quarter ended March 31, 2017, aided by cross-currency tailwinds, analysts said in an ETNow poll.
The Tata group firm had reported $4,387 million revenue for the December quarter. TCS is scheduled to announce its quarterly numbers on Tuesday.
Analysts expect the IT major to report 1.6 per cent sequential growth in constant currency terms. In rupee terms, it is expected to report a 2.03 per cent QoQ drop in net profit to Rs 6,642 crore from Rs 6,780 crore reported for the corresponding quarter last year. The numbers may look weak due to lower other income due to translation losses, experts said.
Net sales are seen at Rs 29,945 crore, compared with Rs 29,735 crore reported for the same quarter last year.
According to the poll, Ebitda margins may jump 2.23 per cent QoQ to Rs 7,905 crore from Rs 7,733 crore reported for the third quarter, while EBIT margins are expected to expand by 40 basis points to 26.4 per cent in March quarter from 26 per cent in the December quarter despite a strong rupee.
Experts believe the company may suggest an improvement in outlook for the financial services vertical and stability in businesses like Diligenta.
There are expectations that the company may formalise its capital allocation policy and may set payout ratio at around 55 per cent.
The stock seems to be building up expectation of double-digit growth and retention of margin guidance of 26-28 per cent.
Overall, the outlook for the BFSI vertical, TCS Japan and Diligenta, traction in new digital initiatives and margin outlook (where the firm may cut expectations to 25-27 per cent) will be watched keenly.
Risk mitigation from any potential increase in minimum wages for H-1B workers and capital allocation policy (with normalised higher dividend, compared with special dividend every three years) will also be watched keenly.
The Tata group firm had reported $4,387 million revenue for the December quarter. TCS is scheduled to announce its quarterly numbers on Tuesday.
Analysts expect the IT major to report 1.6 per cent sequential growth in constant currency terms. In rupee terms, it is expected to report a 2.03 per cent QoQ drop in net profit to Rs 6,642 crore from Rs 6,780 crore reported for the corresponding quarter last year. The numbers may look weak due to lower other income due to translation losses, experts said.
Net sales are seen at Rs 29,945 crore, compared with Rs 29,735 crore reported for the same quarter last year.
According to the poll, Ebitda margins may jump 2.23 per cent QoQ to Rs 7,905 crore from Rs 7,733 crore reported for the third quarter, while EBIT margins are expected to expand by 40 basis points to 26.4 per cent in March quarter from 26 per cent in the December quarter despite a strong rupee.
Experts believe the company may suggest an improvement in outlook for the financial services vertical and stability in businesses like Diligenta.
There are expectations that the company may formalise its capital allocation policy and may set payout ratio at around 55 per cent.
The stock seems to be building up expectation of double-digit growth and retention of margin guidance of 26-28 per cent.
Overall, the outlook for the BFSI vertical, TCS Japan and Diligenta, traction in new digital initiatives and margin outlook (where the firm may cut expectations to 25-27 per cent) will be watched keenly.
Risk mitigation from any potential increase in minimum wages for H-1B workers and capital allocation policy (with normalised higher dividend, compared with special dividend every three years) will also be watched keenly.
