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TCS Kicks Off Q3 Earnings Season Amid Growth Expectations
Tata Consultancy Services (TCS) is set to report its third-quarter earnings for fiscal year 2025-26 on January 12, marking the start of India Inc.'s earnings season. Brokerages anticipate that robust performance in its overseas business will bolster both revenue and profit for the IT behemoth.
Revenue and Profit Projections
Consensus estimates suggest TCS will post a 1.21% quarter-on-quarter revenue increase, reaching ₹66,595 crore. This growth is primarily attributed to strength in developed markets and key verticals like Banking, Financial Services, and Insurance (BFSI) and hi-tech. The company's net profit is expected to rise by a significant 6.9% sequentially to ₹12,908.7 crore, although margins are anticipated to face some pressure. Year-on-year, net profit is forecast to grow by an average of 4.27%.
Analyst Insights and Watch-outs
Analysts expect the Total Contract Value (TCV) to remain within the $10-$11 billion range. Key factors investors will monitor include TCS's strategies for accelerating revenue growth, the depth of its deal pipeline, and management's outlook on client budgets and planned data center investments.
Brokerage Forecasts Vary
Kotak Securities forecasts largely flat sequential revenue, with international business growth partially offset by a decline in domestic operations. They predict stable Ebit margins, potentially aided by rupee depreciation, but note that employee separation costs are not included in their estimates. The brokerage highlights investor focus on TCS's renewed aggression and increased investments for growth.
Motilal Oswal anticipates a 0.5% Q-o-Q revenue growth in constant currency, driven by international segments and the BSNL project ramp-up. They foresee a sequential decline in Ebit margins of around 30 basis points due to wage hikes and deal-related costs. Management commentary on demand trends, AI data centers, and client budgets will be crucial.
Systematix Research projects a 0.2% sequential rise in USD revenue, led by BFSI and hi-tech. They expect a marginal 14 basis point improvement in Ebit margin, influenced by currency tailwinds, optimization, and AI-driven productivity gains.