According to the average of the estimates by ETIG and six brokerages, the country’s largest IT exporter will report 0.6% sequential growth in revenue at $7,473 million after posting a 0.6% fall in the prior quarter. In rupee terms, the growth rate will be higher at 2.8% taking the revenue to ₹65,242.4 crore due to favourable currency movement during the quarter. The rupee depreciated by 2% sequentially against the dollar during the quarter on average. A weaker domestic currency improves realisation of exporters.
Agencies“TCS is expected to post revenue growth of 1.0% quarter-on-quarter in constant currency terms, with international business growing by around 1% and India flat,” mentioned Motilal Oswal Financial Services in a preview report. The broking firm expects a ramp up in the BSNL project from the December quarter. A winding down in the local telecom operator’s 4G project had pulled down the top line in the previous quarter by 2.8% taking the total revenue drop to 3.3% in constant currency terms.
The operating margin is expected to shrink by 10-20 basis points from 24.5% in the previous quarter following partial wage increase and lower utilisation. Net profit is likely to fall by 1.6% sequentially to ₹12,560.5 crore. In the prior quarter, it had risen significantly by 4% on account of one-time tax refund.
“We expect TCS to report a 20 basis points sequential contraction in margin given the impact of one month wage hike and lower utilisation,” stated Elara Capital in a preview report highlighting that the non-recurring nature of the tax refund would impact profitability sequentially.
The stock has lost 11% since July 09 when the company had declared the June quarter numbers following demand weakness. In this backdrop, investors would keenly track the September quarter performance to find cues on the deal pipeline and its conversion rate, hiring and margin outlook among other factors.
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