ET Intelligence Group reports that Tata Consultancy Services (TCS) is expected to announce a weaker performance for the January-March 2025 period. This would mark the second consecutive quarter of subdued results, attributed to delays in discretionary spending as clients assess the impact of changing geopolitical and global economic conditions. The company is scheduled to release its fourth-quarter figures on Thursday evening.
According to estimates by ETIG and ten brokerages, TCS’s revenue is anticipated to decrease by 0.7% sequentially to $7.4 billion for the March quarter. The company, recognized as the largest IT exporter in the country, is projected to experience pressure on its top line due to unfavorable cross-currency movements and a reduction in the BSNL project.
During the March quarter, the dollar appreciated against the euro and the British pound by 1.4% and 1.8%, respectively, based on average rates. This appreciation is expected to negatively affect the realizations when the IT companies’ European currency revenues are converted to dollars for accounting purposes, resulting in cross-currency challenges.
In rupee terms, TCS’s revenue may increase by 1.3% to ₹64,777 crore, with a net profit growth of 1.5% to ₹12,571 crore, aided by the weaker rupee against the dollar. The rupee depreciated by 2.5% sequentially against the dollar to ₹86.6.
Emkay Global Financial Services mentioned in a sector preview report that subpar growth is expected to persist in the March quarter due to weak discretionary spending and clients’ cautious approach amid uncertain macroeconomic factors. The brokerage predicts a 1.1% sequential decline in dollar-denominated revenue for TCS, attributing 60 basis points of the impact to cross-currency fluctuations.
The company’s operating margin (EBIT margin) is likely to increase by 40-50 basis points compared to the previous quarter when it stood at 24.5%. Factors such as a weaker rupee, improved operating efficiency, and reduced revenue from the BSNL project—which has a lower margin profile compared to other projects—are anticipated to offset the impact of higher investments in artificial intelligence-related technologies and skill development, thus supporting profitability.
Investors will also be focused on understanding TCS management’s perception of the tariff-related decisions made by the U.S. administration, as the country represents TCS’s largest market. IT stocks have been under pressure recently due to concerns that the resulting tariff changes might affect the financial performance of IT clients.
