Top TCS Analysts Expect Growth in Q2, Despite Concerns Over UK Business
Top TCS analysts expect a sequential increase in revenue for the September quarter. Concerns about the UK business and potential margin pressures remain. Investors will be closely watching management’s commentary on these factors and overall demand trends.
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Top TCS Analysts Expect Growth in Q2
TCS revenue to rise 1.9% in Q2
TCS is anticipated to see a 1.9% sequential rise in dollar-denominated revenue, reaching $7,647.4 million for the September quarter. This growth rate is expected to align closely with that of the previous quarter, indicating that the largest software exporter in the country is likely to maintain its business momentum. The company is set to release its results for the September quarter on Thursday.
JM expects TCS revenue to rise 1.6% in Q2
JM Financial Institutional Securities stated in a report that they anticipate a 0.9% sequential revenue growth in constant currency, with an 80 basis points cross-currency tailwind resulting in a 1.6% quarter-over-quarter increase in dollar revenue. The brokerage also expects a $75 million contribution from the BSNL deal. In rupee terms, revenue could increase by 2.3% to ₹64,065.8 crore, aided by cross-currency benefits. Additionally, net profit is projected to rise by 3.9% to ₹12,514.1 crore.
HSBC expects TCS revenue to decline in Q2
Top TCS Analysts Expect Growth in Q2 In a preview report, HSBC Securities and Capital Markets (India) expressed concerns about a potential sequential decline in the September quarter, primarily due to a slowdown in the UK business. While the ramp-up from the BSNL deal continues to support growth, overall growth is expected to be weak for the quarter.
They predict that the operating margin may either remain stable or increase by 20-40 basis points sequentially. The margin pressure resulting from project ramp-ups is likely to be partially mitigated by the absence of visa costs and wage increases. In the previous quarter, TCS reported a 130 basis points sequential decline in margin, reaching 24.7% in June 2024.
Investors await TCS Q2 results
Top TCS Analysts Expect Growth in Q2 Investors will be paying close attention to management’s commentary on the recovery of discretionary spending by clients and the trends in new deal acquisitions.
According to a report by Emkay Research, important factors to monitor include demand trends in key sectors such as BFSI, Retail, Hi-Tech, Manufacturing, and Communications, as well as the pricing environment amid macroeconomic uncertainties, margin outlook, and hiring plans. In the previous quarter, TCS reported $8.3 billion in new deal wins.
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