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TCS Q2 results preview: Profit may jump 11%; buyback details in focus

BusinessToday.In     October 6, 2020

Tata Consultancy Services (TCS) is scheduled to report the earnings for July-September quarter of FY21 on Wednesday. Brokerages expect TCS to post as much as 11 per cent sequential rise in September quarter's profit. The dollar revenue may be up over 3 per cent sequentially. Analysts say that improvement in the growth outlook for majority of companies within the IT sector including TCS in the second quarter is on account of revival in demand for digital solutions.

Along with kickstarting the earnings for Q2 of the ongoing fiscal, the IT major will also consider share buyback tomorrow. The buyback announcement, details of which are still unknown, led to a 7.3 per cent jump in its share price to a record high on Monday.

HDFC Institutional Equities estimates the sequential profit at Rs 7,777 crore, up 11 per cent sequentially. However, it is down 3.3 per cent on a YoY basis. The dollar revenue may stand at $5,232 million, up 3.4 per cent sequentially. But it is down 5.2 per cent YoY.

"We expect the company to post robust margin expansion of around 200 bps enabled by strong volume growth and better cost control and efficient execution," Edelweiss Securities said in a  report.

Analysts at ICICI Securities expect the company to post 2.6 per cent QoQ growth in constant currency led by improved demand from banking, financial services and insurance (BFSI), healthcare and telecom and media verticals, project ramp-up, low base, and easing of supply-side pressure.

"Cross-currency tailwind would lead to revenue growth of 3.8 per cent QoQ in US dollar terms at $5,251.2 million. In rupee terms, revenue is expected to increase by 1.9 per cent QoQ to Rs 39,069.2 crore," it added. Profit after tax (PAT) may jump 8.3 per cent QoQ to Rs 7,586.5 crore. However, on YoY basis, the profit may fall 5.7 per cent.

Meanwhile, the country's largest software services firm reported a 13.8 per cent decline in the June quarter consolidated net profit at Rs 7,008 crore on revenues being impacted by the coronavirus crisis.

Also read: COVID-19 impact: Large companies maintaining digital transformation budgets, says TCS

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