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TCS Q3 results preview: Here are key things to watch out for

NEW DELHI: Tata Consultancy Services (TCS) is expected to report a flat profit growth on slowdown in banking & financial services and retail segments. The IT major is slated to announce its December quarter earnings on Friday.

A high base in the previous year will also be a factor, experts said.

Analysts tracking the IT major expect profit growth in the range of -2 per cent to 2 per cent. Revenue is likely to see growth in single digits.

“We expect revenue growth to moderate to 6.8 per cent YoY on constant currency terms due to slowdown in BFS and retail and high base of the previous year. On a sequential basis, we expect muted revenue growth of 0.8 per cent,” said Kotak Securities. It pegs profit at Rs 8,224.3 crore, up 1.5 per cent YoY.

The brokerage blamed continued weakness in European banking and capital market clients in the US combined with account-specific challenges in retail vertical as the key culprits behind likely subdued quarter for TCS.

KR Choksey Institutional is expecting a profit of Rs 8,050.2 crore, down 0.7 per cent YoY. “Despite Brexit related risks in Europe, cues from the collaborations for cloud and digitisation with Phoenix Group, Virgin Atlantic, Qualcomm, Elisa Smart Factory, 3Petco and Viavi are overall positive,” it said in a note.

Edelweiss Securities sees TCS to deliver 1.7 per cent constant currency terms revenue growth. It also sees strong pound as a positive for the company, as it may help lift dollar revenue growth rate by 40 bps.

The brokerage pencilled in a profit of Rs 7,994.2 crore, down 1.4 per cent.

Among the key things to watch out for are investments towards digital business, number of pipeline deals and average deal size management commentary and overall IT budgets of companies and spending outlook.

Source: Economic Times