TCS drops 2% ahead of June quarter results

NEW DELHI: Shares of Tata Consultancy Services (TCS) declined 2 per cent in Tuesday’s trade ahead of the IT major's June quarter results.

The Tata group firm is expected to report a 2.5-3.2 per cent quarter-on-quarter (QoQ) rise in revenue growth in constant currency (CC) terms. Profit is expected to drop 4-6 per cent sequentially while margins are seen falling 90-150 basis points, led by wage hikes and rupee appreciation.

The scrip closed 2.05 per cent lower at Rs 2,131.45 on BSE.


The management commentary on banking and finance (BFS) space, sub-contractor expenses and any visibility on double-digit growth in FY20 would be keenly tracked.

Prabhuas Lilladher expects Ebit margins to drop 90 bps QoQ on wage hike, rupee appreciation and visa cost.

It sees adjusted net profit falling 4.7 per cent QoQ to Rs 7,746.20 crore. On YoY basis, the brokerage expects profit growth of 5.5 per cent for TCS. The brokerage expects dollar revenue growth of 2.7 per cent QoQ and 9.7 per cent YoY. Constant currency revenue is seen rising 3.2 per cent.

Emkay Global Financial Services, which sees 3 per cent CC revenue growth for TCS, said that the listed peers of TCS in US have highlighted slow decision making in financial services vertical. It said that while the margin for TCS improved in FY19, they remained below the guided range of 26-28 per cent. The brokerage expects hiring trends to will be in focus.