IT major Tata Consultancy Services (TCS) will report earnings for the quarter ended September 2023 on Wednesday, October 11. The TCS board will also consider a buyback of shares on Wednesday.
As recessionary headwinds continue unabated, the Q2FY24 results for the overall information technology (IT) sector are expected to be muted, in continuation of the previous quarter, analysts said.
Revenue growth in the IT sector is likely to be modest, dragged by lower discretionary tech spends, and a delay in execution of deals. However, demand stays solid — likely to show up in strong deal flows yet again — which should translate to a strong recovery in H2FY24, according to Nuvama Institutional Equities.
TCS’ net profit in the second quarter of FY24 is expected to rise by 1.1 per cent to ₹11,193.4 crore from ₹11,074 crore in the previous quarter.
Earnings before interest and tax (EBIT), or the operating profit, during the quarter is estimated to grow 2.2 per cent sequentially to ₹14,052.8 crore from ₹13,755 crore.
Analysts expect TCS’ margins to improve by 30 bps to 23.5 per cent from 23.2 per cent, QoQ, on the back of wage hike normalisation given in Q1.
Dinesh Gupta - Fund Manager - Torus Oro said, “For Q2FY24E, we expect TCS to post revenue growth of ~1% QoQ due to persisting weakness in discretionary spends across several verticals. EBIT margin to improve by ~60 bps to 23.8 per cent, primarily aided by operating efficiencies. TCS continues to win large deals, but we would closely watch management commentary on the demand scenario.”