TCS share price zooms ahead of Q1FY25 results; key things to watch

Tata Consultancy Services (TCS) shares were trading 1.79 per cent higher at Rs 3979.90 per share on the BSE in Thursday’s intraday trade. The stock price zoomed in anticipation of the IT services major’s financial results announcement which is due today, July 11, 2024 for the first quarter of fiscal year 2024-25 (Q1FY25). 

The Indian IT giant is expected to report a single-digit growth in its topline and bottomline for (Q1FY25). The growth is led by recovery in the flow business and clients’ willingness to resume discretionary spending, however, wage hikes will be negatively impacting its margins, analysts said in their preview notes. 

TCS is expected to report a net profit of Rs 11,771-12,140 crore for the June quarter, up 6-9 per cent year-on-year from Rs 11,074 crore in Q1FY24. Sequentially, this could dip by 3-5 per cent. Revenue is forecasted to rise 4-5 per cent year-on-year to between Rs 62,086-62,491 crore, as per brokerage estimates.

Most brokerages expect a decline in earnings before interest tax margins for TCS in the range of 140 to 186 basis points quarter on quarter owing to wage revision and likely decline in utilisation rates.

According to those at Kotak Institutional Equities, revenue growth will be driven by ramp-up of strong order signings of earlier quarters. With their estimates including $150 million from the BSNL deal, leading to a marginal growth compared to the March 2024 quarter. Analysts said they expect weak revenues in financial services and telecom segments. 

Analysts are also keenly interested in management commentary on client discretionary spending, fewer deal announcements in Q1FY25, campus hiring, large deals and turnaround in BFSI. Further the state of spending in the impacted North America market, hi-tech & telecom verticals,  pipeline of deals, and levers to defend and increase margins will also be key monitoring points for investors. 

At 09:55 AM; the stock price of TCS was trading 0.96 per cent higher at Rs 3,947.40 per share on the BSE. By comparison, the BSE Sensex was up marginally by 0.04 per cent.