TCS Q1 results, dividend today: Deal wins, salary hike impact & other things to watch

Tata Consultancy Services Ltd (TCS) is all set to report a 15-20 per cent rise in year-on-year (YoY) profit on a double-digit growth in sales for the June quarter. While Ebit margin is seen expanding on a year-on-year basis, wage hikes may hit the sequential print. Analysts though sees the impact to be lower, partly negated by operating efficiencies, employee pyramid rationalisation and cross-currency tailwinds. Deal wins are seen in the $11-12 billion range.

Here are five things one must track in TCS results:

TCS deal wins

TCS may report robust deal wins, backed by BSNL 5G deal worth $1.83 billion and UK NEST deal worth $1 billion, analysts cited. Kotak Institutional Equities pegs total contract value (TCV) at $11-12 billion, up 34-46 per cent.

TCS profit, sales growth

On an year-on-year basis, HSBC is factoring in a 20.8 per cent YoY growth in profit at Rs 11,443 crore compared with a Rs 9,470.80 crore in the same quarter last year. Revenue is seen 12.7 per cent at Rs 59,438.90 crore compared with Rs 52m750.80 crore in the year-ago quarter. It sees dollar revenue at $7,231 million, up 0.5 per cent QoQ.

"Expect TCS growth to be flat QoQ in constant currency (cc) terms as industry weakness drags growth in Q1. We see YoY CC growth moderating to 7 per cent in Q1," it said.

Phillip Capital pegs Q1 profit for TCS at Rs 10,889.50 crore, up 14.9 per cent. The brokerage sees revenue rising 13.1 per cent YoY to Rs 59,694 crore. "We expect CC revenue growth of 0.5 per cent QoQ. Modest growth on account of weakness in discretionary spending and cautious sentiment across major verticals," it said.

Emkay Global sees profit rising 17.8 per cent to Rs 11,167.70 crore and sales 13.6 per cent YoY to Rs 59,911.8 crore.

Impact of salary hike on margin

Phillip Capital sees Ebit margin at 23.4 per cent against 24.5 per cent sequentially. Emkay Global pegs Ebitda margin at 25.7 per cent against 26.7 per cent in March and 25.4 per cent in the year-ago quarter.

TCS interim dividend

The TCS board would consider interim dividend along with its quarterly results. If declared, the dividend will be paid to the equity shareholders of the company whose names appear on the register of members of the company or in the records of the depositories as beneficial owners of the shares as on July 20, which is the record date fixed for the purpose.

TCS management commentary

Analysts said eyes will be on any commentary suggesting the possibility of an uptick in H2 as H1 played out in a muted manner. Demand trends in key verticals like BFSI, Retail, Manufacturing and Communications would be watched, so would the deal intake in Q1 and deal pipeline. Investors would want to know about the pricing environment, considering macro uncertainties and deal mix shift towards cost takeouts. Hiring plan amid slowing growth and macro uncertainties would also be something investors would want to know about on Wednesday.

TCS results will be out post market hours of Wednesday. Its leadership team will address the media at 5:30 PM IST and the interaction will be streamed live on TCS' website and on its YouTube channel. It will be followed by an earnings conference call at 7 PM IST, during which the TCS leadership team will discuss the financial performance and take questions -- the audio archive of the same will be available on the TCS website after two hours of completion of the call.

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