TCS share buyback, Q2 results timing, dividend, buyback history, analyst views & more

Tata Consultancy Services Ltd (TCS) is scheduled to announce its September quarter results on Wednesday. The board of India’s largest software exporter would consider a second interim dividend, in addition to a share buyback proposal which, if approved, would be its fifth in history after 2017, 2018, 2021 and 2022. Analysts said all eyes would be commentary on deal wins including BSNL, the demand scenario and margin, the buyback value and the reason behind ending work-from-home from October 1.

TCS results timing

TCS would announce its results post market hours of Wednesday and is scheduled for a press conference at 5.30 pm IST, where TCS' leadership team will interact with media. Later in the day, TCS will host an earnings call at 7 pm. As far as the second interim dividend is concerned, the record date, subject to declaration, is set at October 19.

TCS share buyback

TCS had announced a total Rs 66,000 crore in share buyback in the last six years. TCS unveiled a share buyback of up to 4,00,00,000 shares, aggregating Rs 18,000 crore in 2022. This was 1.08 per cent of the total paid up equity share capital of the IT firm. It announced a share buyback of Rs 16,000 crore in 2021, Rs 16,000 crore in 2018 and Rs 16,000 crore in 2017.

TCS Q2 results: What to watch?

TCS had in reported $10.2 billion in deal wins in the June quarter after strong total contract value (TCV) of $10 billion in the March quarter, which was above the guided range of $7-9 billion. Nirmal Bang Institutional Equities expects September quarter's TCV to be in the guided range, including the BSNL deal (TCV of $1.8 billion).

"Commentary around BFSI, retail, telecom and technology will be keenly watched as TCS likely has the highest exposure in the Tier-1 set with deep relationships developed over the past several decades in both US as well as Europe," it said adding that investors would seek answers to: "What kind of margins and working capital cycle will one sees in the BSNL deal? How is TCS planning to piggyback on the BSNL deal to create traction in the Open RAN space abroad? Demand commentary for 2HFY24, conversion of TCV to revenue, commentary around BFSI demand and usage of Gen AI to improve productivity," Nirmal Bang said.

The brokerage said it would also like to hear on 5-day work from office rule, asking whether it is done to manage low utilisation, as the IT major over hired in FY22.

TCS share movement, Q2 projections

Shares of TCS has risen 11.78 per cent in 2023 so far, underperforming the BSE IT by 157 basis points during the same period. It though fared better than a 3 per cent drop in Infosys.

HDFC Institutional Equities expects TCS to report 10.5 per cent YoY rise in profit at Rs 11,530 crore on 9.5 per cent YoY rise in sales at Rs 60,565 crore. Dollar sales are seen at $7.33 billion, up 1.5 per cent sequentially. Ebit margin is seen expanding 94 basis points QoQ (up 9 basis points YoY) to 24.1 per cent.

Emkay Global said the technology exporter may log 9.4 per cent jump in profit at Rs 11,415 crore and sees sales rising 9 per cent YoY to Rs 60,283.60 crore.

Motilal Oswal Securities projects TCS' bottom line growing 10.9 per cent YoY to Rs 11,610 crore on 9.2 per cent YoY jump in sales at Rs 60,400 crore. It sees Ebit margin at 24 per cent. TCS looks to benefit from long-term secular demand on IT services, Motilal Oswal Securities said.

Even in the near-term, the brokerage said TCS may win disproportionately through the current nature of spends.

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