Indian IT major Tata Consultancy Services (TCS) is set to announce its Q1 FY 2023-24 financial results on July 12, Wednesday. The IT services giant will get the ball rolling for the large-cap earnings season for the first quarter ended June 30, 2023, for the current fiscal year.
Revenue, growth, profits: Analysts take
The IT major had announced a disappointing result in the last quarter of FY 2022-23 because of cutbacks on discretionary spends by clients due to the banking crisis in February.
Analysts expect this trend to continue in the results of Q1 FY24 as well due to weak macros.
"We believe revenue growth year-on-year will move to low-single digits to high-single digits. Weak discretionary spending across many verticals, and especially in financial services, telecom and hi-tech, should contribute to weak trends, “ Kotak Institutional Equities said.
They added, “Dollar growth quarter-on-quarter will be aided by a cross-currency tailwind of 13-42 basis points."
Earnings via dividends for investors
It is worth noting that apart from the Q1 FY24 financial results, the board of the Indian IT major will also consider and approve an interim dividend for the quarter ended June 30. Moreover, as per exchange filings, the IT services company has set July 20, 2023 as the record date for the purpose of the said interim dividend.
A TCS buyback on the horizon?
Analysts also believe that the IT major could announce a buyback of shares in the upcoming results.
Investment banking and research organisation Jefferies said in a report, "We believe TCS could announce a buyback as well.”
TCS had announced a share buyback in March 2022. The buyback lasted from March 9 to March 23, 2022, and was worth Rs 18,000 crore. The IT services company had offered to buy back up to 40 million shares for an aggregate amount not exceeding Rs 18,000 crore, or 1.08 percent of the total paid up equity share capital, at Rs 4,500 per share.
Before that, TCS announced a share buyback of up to Rs 16,000 crore. The buyback round started on December 18 and ended on January 1, 2021. TCS shareholders had approved a proposal to buy back up to 5,33,33,333 equity shares of the company for Rs 3,000 per share for an aggregate amount not exceeding Rs 16,000 crore.
Prior to that, In 2018 and 2017, TCS had announced two share buybacks worth Rs 16,000 crore each. In 2018, TCS bought back the shares at Rs 2,100 per share, while in 2017, the price was Rs 2,850 per share.
What do analysts say about TCS’ deal pipeline?
Jefferies highlights that positive developments around the IT major’s deal pipeline would be taken with a pinch of salt, while negatives would raise concerns.
The investment bank said in a report, “Commentary around nature/tenure of deals, sales/deal cycles, pricing, vendor consolidation and attrition would garner attention. While positives should be taken with caution, negatives could raise concerns.”