IT bellwether Tata Consultancy Services (TCS) will kickstart the June quarter earnings on Thursday. The country's largest IT services provider is expected to post up to 5.5 per cent fall in revenue amid the ongoing coronavirus crisis. TCS will be the first large-cap company to announce earnings for the quarter hit by coronavirus lockdown. Brokerages expect the company to report muted performance amid pressure in travel, retail, manufacturing and other segments due to COVID-19 pandemic.
ICICI Securities expects dollar revenue to fall 5.5 per cent QoQ in constant currency terms to $5,122.8 million. The profit after tax (PAT) or net profit at Rs 7,846.7 crore, may come down 3.5 per cent YoY and 2.5 per cent QoQ. The brokerage also says that IT spending, the trend across verticals, and key long term trends will be key monitorables.
Analysts at Emkay Global projects up to 5 per cent sequential revenue fall in US dollar terms to $5,173 million. In rupee terms, the brokerage sees 4.5 per cent on-year decline in profit at Rs 7,761 crore on a 2.9 per cent rise in sales at Rs 39,265 crore.
"Sharp pullback in spending among directly impacted verticals of travel, transportation, retail (apparel and department stores) and autos will lead to a revenue decline. We expect relatively stable performance in the financial services vertical. Ramp up of large deals will limit the impact on overall revenues," said Kotak Institutional Equities in a note. The domestic brokerage also estimates 5.4 per cent sequential decline in the constant currency revenue.
"We forecast EBIT margin to decline by 85 basis points (0.85%) sequentially with headwinds from decline in revenue offset by rupee depreciation, lower travel cost, lower variable payout and operational efficiencies," said IIFL Securities.
Shares of TCS closed the intraday trade at Rs 2,212.50, down 6.40 points, or 0.29 per cent on Thursday.