Tata Consultancy Services Ltd (TCS), India’s largest information technology company, is set to announce its third-quarter results for the financial year 2024-25 today, January 9, 2025. As investors and analysts eagerly await the figures, here are the top five things to track in TCS’s upcoming earnings report.
1. Expected Revenue Growth
TCS is projected to see a revenue increase of between 5.2% and 6.4% for Q3, according to estimates from various brokerages including Nomura, Motilal Oswal Financial Services, and JM Financial. This growth is particularly significant given the company’s reliance on sectors like banking, financial services, and insurance (BFSI), which are critical indicators of IT demand revival in developed markets.
2. Profitability Metrics
Profitability will be another crucial aspect to monitor. Analysts have mixed expectations regarding TCS’s earnings before interest and taxes (EBIT) margin. Nomura forecasts an increase of 110 basis points, while HDFC Securities and Motilal Oswal predict a decline of 50 to 80 basis points. Furthermore, adjusted profit after tax (PAT) is anticipated to grow by 2% year-on-year, with other estimates ranging from 8% to 10% growth.
3. Deal Wins and Business Development
Despite a slowdown in deal wins during the holiday season, TCS has reportedly secured five significant contracts from clients such as Bank of Bhutan and Telenor Denmark. Analysts will be keen to see how this impacts the overall business outlook and whether TCS can maintain its lead among large-cap IT firms.
4. Impact of Furloughs and BSNL Deal
The company has experienced furloughs in Q3, which could lead to a 0.8% decline in revenue compared to the previous quarter. Additionally, revenue contributions from the ₹15,000-crore BSNL deal are expected to moderate this quarter following a strong performance in Q2. The dynamics surrounding these factors will be critical in assessing TCS’s overall performance.
5. Progress on Artificial Intelligence Initiatives
TCS’s advancements in Generative AI (GenAI) will also be closely observed. As AI continues to revolutionize the IT landscape, stakeholders will want updates on how TCS is integrating these technologies into its service offerings.
Conclusion
As TCS prepares to release its Q3 results, all eyes will be on these key areas that could significantly influence investor sentiment and market performance. The outcomes will not only reflect TCS’s current standing but also provide insights into broader trends within the IT sector.
Disclaimer: This article is based on information available as of January 9, 2025. Further updates may change details regarding TCS’s performance and market conditions.
