TCS Q1 results, dividend today; earnings timing, analyst preview, key things to watch

Tata Consultancy Services Ltd (TCS) will kick start the earnings season on Thursday, with its June quarter results and interim dividend for FY25, if any, likely to be declared post stock market hours. Analysts said June was one of the weakest first quarters for domestic IT players in the last one decade, with TCS likely to report 4-9 per cent rise in year-on-year (YoY) profit on up to 5 per cent increase in sales. Deal wins are seen in the $10-12 billion range. Thanks to wage hikes, TCS is seen reporting a contraction in margin sequentially. Revenue growth both dollar and constant currency (CC) terms could be muted and likely to lag that of Infosys' on a sequential basis. 

Analysts said commentary around BFSI, Retail, Telecom and Technology will be keenly watched as TCS has the highest exposure to the verticals in the tier-1 set, with deep relationships in both US as well as Europe, and the IT firm in the past indicated weakness in these verticals. 

Besides, analysts said TCS is expecting FY25 to be better than FY24 but it has not indicated by how much. Any commentary around discretionary spending, update on Gen AI projects and any hint on when can TCS reach the aspirational margin range of 26-28 per cent would be keenly followed. 

MOFSL estimated TCS' Q1 profit at Rs 12,140 crore, down 2.9 per cent QoQ but up 9.2 per cent YoY. ICICI Securities expects TCS to report 5.9 per cent YoY rise in adjusted net profit at Rs 11,731 crore on 5.2 per cent increase in sales at Rs 62,491 crore. Revenue growth in CC terms is seen at 1.8 per cent sequentially, dollar growth at 1.7 per cent QoQ. Ebit margin is seen contracting 192 basis points to 24.1 per cent QoQ, but up 90 basis points over last year's 23.2 per cent.

Antique Stock Broking sees TCS' profit rising 7 per cent YoY to Rs 11,853 crore on 4.6 per cent increase in sales at Rs 62,094 crore. It sees a 180-basis point hit on Ebit margin.

"We forecast 1.5 per cent revenue growth QoQ in constant currency. Expect dollar revenue growth to be 1.4 per cent QoQ, with 10 bps headwind from cross currency. We have built similar contribution from BSNL as ramp-up may be slow because of the elections. Expects margin to decline by 170 bps to 24.3 per cent, largely impacted by wage hike of 200 bps, partially offset by operational efficiency and lower sub-contracting cost. Expect deal bookings to remain strong at above $10 billion," it said.