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TCS Q4 earnings preview: Coronavirus likely to hit revenue; all eyes on future outlook

Edelweiss Securities expects 0.7 per cent fall in company's revenue growth sequentially in constant currency terms; TCS may post 0.6 per cent fall in revenue at $5,554 million in dollar terms on a sequential basis, it says

Ashish Pandey | April 16, 2020 | Updated 14:34 IST
TCS Q4 earnings preview: Coronavirus likely to hit revenue; all eyes on future outlook
In Q3FY20, TCS reported a net profit rise of 1 percent sequentially to Rs 8,118 crore

Tata Consultancy Services (TCS) will announce the March quarter results for FY20 on Thursday. India's largest IT services provider, TCS, is expected to post a fall in revenue amid the ongoing coronavirus crisis, brokerages said. The investors are also likely to keep a close watch on the impact of coronavirus outbreak on the business and IT firm's commentary on client discretionary spending and pricing. The IT companies are likely to be negatively impacted amid coronavirus pandemic and the constant currency revenue for TCS may just grow 0.5 per cent sequentially, ICICI Direct said in a note.

"The ongoing outbreak of Covid-19 is impacting the economy with IT companies also expected to feel the heat. We expect constant currency revenues to grow 0.5% sequentially (assuming 1% hit due to impact from Covid-19) mainly on the back of lockdown (in India and many countries globally) and slower client decision making led by lower discretionary spends. However, the full impact would be visible in Q1FY21E," ICICI Direct also said.

The cross currency would act as a headwind of 10 bps leading to a dollar revenue growth of 0.4 per cent sequentially to $5,608 million, it added. "Rupee revenue growth is expected to grow 2% QoQ (to | 40,644 crore). EBIT margins may remain flat QoQ to 25% mainly aided by rupee depreciation and lower travel costs," it also said.

On the other hand, Edelweiss Securities expects 0.7 per cent fall in company's revenue growth sequentially in constant currency terms. TCS may post 0.6 per cent fall in revenue at $5,554 million in dollar terms on a sequential basis, it added.

In Q3FY20, TCS reported a net profit rise of 1 percent sequentially to Rs 8,118 crore. The revenue rose 6.7 per cent on-year to Rs 39,854 crore.

The board will also recommend a final dividend, if any, for the fiscal for the approval of the shareholders at the ensuing 25th Annual General Meeting, TCS recently said in a regulatory filing. Shares of TCS were trading at Rs 1,736.75, up 1.60 points, or 0.092 per cent on NSE at the time of reporting.

Meanwhile, on a quarterly basis, Wipro on Wednesday reported a 5.3 per cent fall in consolidated profit at Rs 2,326 crore for January to March period. The IT firm didn't provide any revenue guidance for the June quarter due to the uncertain environment in wake of coronavirus pandemic. 

Also read: Wipro net profit rises 8% to Rs 9,772 crore in FY20; suspends revenue guidance on coronavirus uncertainty

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