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Published: Jan 8, 2023
Updated: Jan 8, 2023

TCS Q3 Earnings: TCS Results to Set the Tone for India's IT Industry in the Coming Months

Q3 Results on Monday

TCS, India's largest IT company, is set to release its third quarter earnings on Monday. While the December quarter is typically weak for the IT sector, TCS is expected to see a moderate 1-2% sequential growth in consolidated revenue, according to estimates by brokerages. This would mark the slowest revenue growth for TCS in over six quarters. The December quarter is typically a weak one for the IT sector, and TCS is expected to see a moderate 1.4% sequential growth in dollar revenue due to the impact of the usual seasonality. In constant currency terms, analysts expect revenue to grow 1.3-1.7% sequentially. Deal wins, the outlook on the deal pipeline, the pricing environment, margin outlook, and updates on any potential delays or cancellations of projects will be closely watched by investors and analysts. TCS's results will provide insight into the state of the IT industry in India and set the tone for the sector's performance in the coming months

Decrease in Attrition rates and improved operating margins to aid jump in profits

Despite the slow sales growth, TCS is predicted to see an improvement in profitability due to better utilization and lower attrition. The operating margin is expected to expand by 30-80 basis points from 24%, resulting in a 5-9% sequential increase in consolidated net profit.

Clients cutting down on Discretionary costs; Macro-factors critical ahead

Deal wins will be a key factor to watch, with analysts estimating TCS will secure deals worth $7-9 billion for the December quarter. The Street will also be interested in the outlook on the deal pipeline for the coming quarters, given the macroeconomic slowdown in major markets like the US and Europe. Additionally, the pricing environment, margin outlook, and updates on any potential delays or cancellations of projects will also be closely watched. The demand outlook for TCS in the coming months will be crucial in determining the performance of the IT industry.

To set tone for the IT sector’s performance in coming months

TCS's third quarter results will provide insight into the state of the IT industry in India, and set the tone for the sector's performance in the coming months. Investors and analysts will be closely watching the company's results to gauge the impact of the pandemic on the industry and get a sense of what to expect in the coming quarters.