TCS Q4 result preview: What to expect?

India's biggest tech company Tata Consultancies Services (TCS) Limited will announce its quarterly financial results for the January to March period today. Analysts are expecting TCS to clock 2.8-4 per cent growth on sequential basis in sales, while somewhere between 5 and 10 per cent growth in profit on a quarter-on-quarter (QoQ) basis in Q4.

They expect TCS to post record revenue in dollar terms and on constant currency prices. Motilal Oswal has pegged TCS to post 4 per cent growth in dollar terms on a QoQ basis and 3.4 per cent growth on QoQ basis in constant currency terms, both highest among top five companies. In rupee terms, TCS is expected to clock 2.8 per cent growth on QoQ basis and 8.2 per cent on YoY basis, while its profit could rise 9.6 per cent on QoQ and 18.2 per cent on YoY basis.

JM Financials expects TCS to record 4.2 revenue growth in constant currency terms on QoQ basis following its consolidation of Pramerica Ireland and Postbank in Q4.

Also read: Another stellar quarter for Infosys, TCS, Wipro? IT to see strong growth in Q4FY21

TCS had reported a 7.01 per cent year-on-year rise in its consolidated net profit at Rs 8,701 crore for the third quarter ended December 31, 2020, driven by strong demand for its cloud services during the COVID-19 pandemic. It was the IT bellwether's strongest third-quarter growth in the last nine years.

The information technology (IT) sector as a whole is likely to surprise again with strong growth numbers in the just-concluded quarter. "We estimate revenue growth between 1.6-4.3 per cent quarter-on-quarter in constant currency (CC) for Tier-1 and 2-4.4 per cent q-o-q CC for Tier-2," said a Prabhudas Liladher report.   

Strong deal win momentum continued even in the fourth quarter, which will reflect on their earnings as well. Deal wins were robust with increasing large deals announced in the communication sector -- TCS deal won with Three UK & VodafoneZiggo BV; Wipro & TechM signed deals with Telefonica Germany. Deal pipeline for Tier 2 companies also remained robust with large deal wins bagged by Mindtree (Knauf, Alfac) and LTI (Mutual Benefit Group (MBG), Komercni Banka). The TCS share is down 1.43 per cent or Rs 44.65 at 3,277.60 apiece from previous session close of Rs 3,322.25 on the NSE.

Also read: TCS Q3 results: Profit rises 7% YoY to Rs 8,701 crore; declares interim dividend of Rs 6