Tata Consultancy Services (TCS), India’s largest IT services provider, is set to announce its Q3 FY25 results today, January 9, 2025, after market hours. Analysts expect muted growth due to seasonality and reduced contribution from the BSNL deal. Below are the key updates leading up to the results announcement.
Key Expectations for Q3 FY25
- Revenue Growth:
- Analysts project a 0.6% sequential dip in revenue in USD terms.
- Growth is expected to slow due to furloughs and reduced contribution from the ₹15,000 crore BSNL deal.
- Net Profit & EBIT:
- Low single-digit sequential growth is expected in net profit and EBIT.
- EBIT margins are forecast to expand by 40 basis points.
- International Revenue:
- Likely to decline by 0.4%, marking the weakest growth since the pandemic.
- Full-Year Revenue Growth (FY25):
- Expected at 5%, with around 2.8% driven by the BSNL deal. Organic growth is projected at 2%.
Market Sentiment and Stock Movement
- Share Performance:
- TCS shares were trading flat today, reflecting a 1.5% decline earlier in the session, closing at ₹4,046.50.
- In comparison, Infosys saw a 25% growth in 2024, overshadowing TCS’s 8% gain.
- Sector Impact:
- The IT sector, impacted by seasonal weaknesses, sees HCLTech leading Q3 growth projections with 4% QoQ growth, driven by its products business.
Key Factors Dragging Growth
Seasonal Weakness:
- Furloughs impacting billable hours in Q3.
- BSNL Deal Impact:
- Reduced contribution from the ₹15,000 crore BSNL 4G network deployment deal.
- Global Slowdown:
- TCS’s international revenue is expected to fall, reflecting weaker client budgets in major markets.
Analyst Views and Industry Insights
- Muted Quarter Ahead:
- CLSA predicts weak growth in Q3 due to macroeconomic uncertainties and seasonal impacts.
- Upside Potential:
- HDFC Securities highlights TCS’s attractive valuation and potential upside from securing new mega-deals.
- Competitor Analysis:
- Infosys and Wipro are expected to face challenges in H2 FY25.
- Midcap IT firms like Persistent Systems and Coforge continue to outperform, with gains of 4-5% QoQ.
Additional Updates
- TCS’s Historical Margins:
- EBIT margin for Q2 FY25 stood at 24.1%, slightly below projections.
- Client Sentiments Post-US Elections:
- Analysts anticipate improved tech budgets for CY2025, benefiting TCS’s deal pipeline.
Upcoming Earnings Releases
Apart from TCS, several companies, including Tata Elxsi, GTPL Hathway, and Indian Renewable Energy Development Agency, will announce their Q3 FY25 results today.
What to Watch For in TCS Q3 Earnings Report
- Management Commentary:
- Insights on BSNL deal unwinding and international market performance.
- Future Guidance:
- Outlook on growth targets for FY26 and potential client budget expansions.
- Margins and Profitability:
- Updates on EBIT margins amid cost management efforts.
Stay tuned for detailed updates on TCS’s Q3 FY25 results and performance insights after the announcement.
