TCS Q4FY24 results preview: Revenue and PAT may see marginal growth, all eyes on management commentary
Upstox
3 min read • Updated: April 12, 2024, 4:44 PM
Summary
TCS Q4 earnings will be reported post market hours on Friday. The earnings are expected to outperform peers according to analyst expectations.
Tata Consultancy Services (TCS) will kickstart the Q4 earning season on April 12, 2024. As a key component in the IT sector, TCS holds significant weight in the Nifty 50 index, accounting for nearly 4%. Since its last earnings release, shares of TCS have witnessed a modest uptick of about 5.24%.
Also read: TCS Q4 Results Live Updates: Tata Consultancy Services reports ₹12,502 crore net profit
In its recent update, Accenture revised its revenue guidance within the range of 1% to 3%; earlier the guidance was in the range of 2% to 5%, for FY24. The adjustment is attributed to reduced spending on consulting services due to economic uncertainty. This has impacted market sentiment, leading TCS's stock to retrace its gains.
As we approach the much-awaited Q4FY24 earnings, here's what analysts and investors are keeping an eye on.
TCS Revenue and Margin Expectations
| TCS (in Mn) | 4QFY24E | 3QFY24 | QoQ (%) | 4QFY23 | YoY (%) |
|---|---|---|---|---|---|
| US $ Revenue | 7,389 | 7,281 | 1.50% | 7,195 | 2.70% |
| Net Sales (₹) | 6,13,524 | 6,05,830 | 1.30% | 5,91,620 | 3.70% |
| EBIT | 1,57,062 | 1,51,550 | 3.60% | 1,44,880 | 8.40% |
| PAT | 1,21,907 | 1,17,350 | 3.90% | 1,13,920 | 7.00% |
| EBIT Margin | 25.60% | 25.00% | 0.60% | 24.50% | 1.10% |
Analysts predict revenue in US dollars to climb by 1.5% QoQ with a proportionate increase in constant currency (CC). This is boosted primarily by the fact that there have been significant deal wins which offset the expected softness in the international markets.
Additionally, EBIT margins are predicted to improve by 60 basis points (bps) QoQ, an optimistic estimate. The improvement is due to enhanced efficiency as well as cost control measures backed up with continued good order flow.
Market outlook and concerns
Though demand seems upbeat in BFSI, retail, communication and hi-tech segments, there are apprehensions about how the macroeconomic landscape affects clients' choices. This uncertainty makes it important for analysts to assess the deal pipeline, especially large/mega deals during these times.
Moreover, investors anxiously wait for hints on FY25 IT budgets. Also, any new strategic initiatives under the recently appointed CEO have to be monitored closely.
Finally, while TCS is projected to deliver consistent financial performance, listening keenly to management comments during earnings call, may help get some subtle clues on where the company wants to go from here.
Shares of TCS are trading nearly flat with 0.04% gains at ₹3,990 apiece on the NSE.