TCS likely to log 2nd straight weak quarter amid global uncertainty & tariff woes

ET Intelligence Group: Tata Consultancy Companies (TCS) is likely to report sequentially weaker numbers for the January-March 2025 interval, in what could be the second consecutive quarter of subdued efficiency amid delay in discretionary spending as shoppers take time to assess the impression of fixing geopolitical and global financial eventualities.
The corporate is slated to declare fourth quarter numbers on Thursday night. It’s anticipated to report 0.7% sequential drop in income at $7.4 billion for the March quarter, in accordance to the typical of estimates by ETIG and 10 brokerages. The nation’s largest IT exporter is likely to present stress on prime ine due to unfavourable cross foreign money motion and rampdown in BSNL challenge.

Greenback appreciation impression

The greenback appreciated sequentially towards the euro and the British pound by 1.4% and 1.8%, respectively, throughout the March quarter primarily based on common charges.
This could adversely have an effect on realisations when the income of IT corporations within the European currencies is transformed to {dollars} for accounting functions, thereby giving rise to cross foreign money headwinds. In rupee phrases, the income of TCS might develop 1.3% to ₹64,777 crore and web revenue by 1.5% to ₹12,571 crore, aided by weaker rupee towards the greenback. The rupee depreciated by 2.5% sequentially towards the greenback to ₹86.6.

“Subpar development ought to persist within the March quarter as muted demand traits persist on account of weak discretionary spending and cautious behaviour by shoppers amid unsure macros,” acknowledged Emkay Global Monetary Companies in a sector preview report. The brokerage expects TCS to report 1.1% sequential decline within the greenback denominated income citing 60 foundation factors of impression due to cross foreign money fluctuations.

The corporate’s working margin (EBIT margin) is likely to increase by 40-50 foundation factors from a quarter in the past when it noticed a margin of 24.5%. Elements equivalent to a weaker rupee, greater working effectivity and decrease income contribution by the BSNL project-which has decrease a margin profile in contrast to different projects-are anticipated to offset the impression of upper funding pertaining to synthetic intelligence-related applied sciences and ability improvement thereby supporting profitability.All eyes on tariff impressionOther than the same old components equivalent to hiring pattern for the fiscal yr, consumer budgets, and vertical particular demand traits, buyers could be eager to know the way TCS administration perceives the spate of tariff-related choices taken by the administration within the US, its greatest market.

IT shares have been below stress over the previous few days following issues that the following tariff adjustments would impression the monetary efficiency IT shoppers.