TCS Q4 Results Preview: Revenue, PAT may see modest growth; commentary on near-term demand key monitorable

TCS Q4 Results Preview: Indian IT major TCS is expected to report modest numbers for the March quarter of the previous financial year (Q4FY24) led by the ramp-up of large deal wins, including the BSNL deal, even as weakness in key international markets persisted. IT bellwether TCS will report its March quarter earnings on Friday, April 12.

Experts expect TCS’ revenue growth to be in the low single digits quarter-on-quarter (QoQ) in constant currency terms. EBIT margin may remain stable even as operational improvements and cost efficiencies would be offset by low margins in the Indian business.

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Apart from the key numbers, trends on deal winds, attrition and management commentary on near-term demand will be under focus.

Brokerage firm Motilal Oswal Financial Services expects TCS' deal pipeline to remain resilient in the UK regions, but the US and Europe may continue to stay weak.

As per Motilal's estimates, TCS may report a 2.2 per cent QoQ growth in constant currency (CC) terms while EBIT margin may be stable, as operational improvements should be compensated by low margins in the India business.

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For Q4FY24, TCS may report a 5 per cent year-on-year growth in overall revenue and an 8 per cent growth in reported PAT, according to Motilal Oswal.

CA Vatsal Vinchhi, an equity analyst for the IT sector at Choice Equity Broking expects a marginal sequential growth for TCS on the back of a strong order book in the BFSI segment.

"It is expected to report about 1 per cent CC QoQ growth amidst delayed discretionary spending. Margins are expected to remain resilient and to be in the range of 24-25 per cent, however, the aspirational range is 26-28 per cent going ahead," said Vinchhi.

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Santosh Meena, Head of Research at Swastika Investmart expects a modest single-digit growth for TCS in Q4 FY24.

"Net profit is estimated to rise 5-6 per cent year-on-year, with sales growth around 2 per cent. EBIT margin might see a sequential expansion of 20–40 basis points. The BSNL deal's impact and overall Total Contract Value (TCV) will be key factors to watch," said Meena.

Amit Goel, Co-Founder & Chief Global Strategist at Pace 360 expects a modest growth of 2-4 per cent in net profit and around 3-4 per cent growth in revenue.

Dhruv Mudaraddi, a research analyst at StoxBox said TCS’ CC revenue growth may be in low single digits QoQ. He expects the deal flow should continue to be robust.

"Any strategic plans under the new CEO, insights on IT budgets in 2024, near and medium-term demand outlook in the US and Europe, pricing environment in key markets and segments, and updates on the large/mega deal pipeline would be key monitorable," said Mudaraddi.

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