TCS Q2 results, dividend on October 11: Management commentary, deal wins & other things to watch out

Tata Consultancy Services Ltd (TCS) is all set to announce its September quarter results on October 11. Analysts said the largest IT firm by revenues may fare better than peer Infosys and that investors would keenly follow the performance of BFSI vertical, any priority change under the new CEO Krithivasan; investments in GenAI partnerships and solutions, deal pipeline and margin guidance.

Net-net, the IT firm is seen reporting 9-11 per cent rise in profit growth on a similar growth in sales. Margin is seen improving sequentially post wage hikes in June quarter.

For the sector, not much has changed in the past few months, said HDFC Institutional Equities, as it pointed out that most demand indicators for the sector are trailing 10-15 per cent below levels at the beginning of the year and only slightly better than the July lows. It said supply-side factors remained favourable, supporting operational resilience despite soft growth.

BNP Paribas anticipated dollar revenue growth at 1.5 per cent sequentially, up 1.3 per cent QOQ in constant currency (CC) terms, thanks to slowdown-related cuts in discretionary tech spending, partially offset by large deal ramp-ups. This brokerage is expecting a 69 basis points sequential EBIT margin expansion at 23.8 per cent on the back of operational efficiencies.

On YoY basis, Emkay Global expects the IT major to report 9.4 per cent rise in net profit at Rs 11,415 crore compared with Rs 10,431 crore in the same quarter last year. Net sales for the quarter is seen rising 9 per cent YoY to Rs 60,283.60 crore from Rs 55,309 crore YoY. Ebitda margin is seen at 26 per cent against 25.3 per cent YoY in June quarter and 26.2 per cent in the year-ago quarter. 

During the quarter gone by, TCS announced deals with GE HealthCare, BBC, Lexmark, Athora, Lantmännen, JLR, BankID BankAxept AS and Kingfisher Plc, among others. 

Motilal Oswal Securities expect TCS to log 10.9 per cent YoY rise in profit at Rs 11,610 crore on 9.2 per cent YoY rise in sales at Rs 60,400 crore. It sees Ebit margin at 24 per cent. "TCS augurs well to benefit from long-term secular demand on IT services, and even in the near-term, it is expected to win disproportionately through the current nature of spends," Motilal Oswal Securities said.

Along with its quarterly results, the TCS board would also consider second interim dividend for the financial year.

If declared, the record date for the same would be October 19.

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