TCS Q4 Preview: IT major to post muted revenue growth, margin gains likely

Information technology (IT) major Tata Consultancy Services Ltd. is likely to post muted revenue and profit growth in the fourth quarter of the financial year 2025 (FY25) due to seasonality factors and a slowdown in key projects, according to analysts.  

 

The Tata Group’s IT arm will kickstart the fourth quarter earnings season for India Inc. on Thursday, April 10.

 

The revenue for TCS is expected to fall slightly by 1.51 per cent to ₹63,009.75 crore quarter-on-quarter (QoQ), according to the analyst tracked by Business Standard. Revenue growth is expected to remain subdued due to the ramp-down of the BSNL project, though this is likely to be partially offset by a strong rebound in developed markets, analysts said.

 

However, an increase in the earnings before interest and taxes (Ebit) margins is likely to result in a 1.31 per cent sequential increase in the net profit to ₹12,541.9 crore for the IT bellwether in the March quarter. On a year-on-year (Y-o-Y) basis, the net profit is expected to grow at an average of 0.64 per cent.

 

The IT major reported a net profit of ₹12,380 crore for the third quarter, marking an 11.9 per cent rise from ₹11,058 crore in the corresponding quarter of the previous financial year. Revenue for the quarter stood at ₹63,973 crore, up 5.6 per cent year-on-year. On a sequential basis, revenue declined 0.4 per cent. 

 

The impact of tariffs, the US growth outlook, reasons for underperformance in developed markets, and any project cancellations or delays will be the key factors to watch out for, according to analysts.   

 

Here's how analysts of various brokerages expect TCS to fare in Q4:

 

HSBC: The global research firm expects TCS to post a 2.1 per cent Q-o-Q revenue growth to ₹61,237 crore in the March quarter. On an organic constant currency (CC) basis, HSBC expects the company to report 1 per cent Q-o-Q revenue growth. Margins will slightly improve sequentially as benefits of currency depreciation are expected to be invested back into the business for talent, growth and infrastructure.

 

The net profit is likely to increase by 2 per cent Q-o-Q to ₹12,434 crore, while the Ebit are expected to rise by 43 basis points sequentially, according to HSBC.  

 

Kotak Securities: Analysts at Kotak expect TCS to post flat revenues in CC terms for the international business and a $30 million decline in BSNL revenues. They estimate that the tech firm will post a 1.5 per cent growth in revenue to ₹64,963.9 crore sequentially. The tech firm will post a 2.3 per cent Q-o-Q net profit growth to ₹12,663.6 crore and will see a 1.6 per cent Y-o-Y growth in the March quarter, according to Kotak.  

 

The benefit of rupee depreciation will be eaten away by promotions and investments in business, resulting in disappointing margin performance, Kotak said. They expect steady deal wins of $11 billion, a decline from $13.2 billion last year. “Focus will be on reasons for the struggle for growth in international business, which has been insipid due to ramp-downs and modest deal wins.”  ALSO READ | Q4 result preview: Banks' net profit likely fell 4% on NIM pressure 

Nuvama Institutional Equities: The brokerage expects TCS to post a 0.2 per cent Q-o-Q decline in CC revenue growth and a 1 per cent Q-o-Q decline in USD decline due to a ramp-down in the BSNL project, which will be offset by a strong rebound in developed markets. Margin will remain flat sequentially as BSNL tailwinds will come with a lag. Analysts at Nuvama expect deal wins to be stable.

 

TCS will likely post 0.9 per cent sequential growth in revenue to ₹61,237 crore, according to Nuvama. They expect the Y-o-Y growth to be about 5.4 per cent. Meanwhile, the tech major will post a  1.5 per cent sequential growth in profit during the March quarter, with the Y-o-Y growth expected at 1.1 per cent. “We will watch out for outlook on US macro amid the tariff uncertainty and margin recovery trajectory.