Tata Consultancy Services (TCS) is set to release its financial results for the quarter and fiscal year ending on March 31, 2025, today, April 09, 2025. This announcement will mark the beginning of the earnings season for India Inc. With expectations of a weak fiscal close for FY25, investors will be focusing on key factors such as margins, guidance comments, attrition rates, and deal acquisitions.
HDFC Securities is closely monitoring the situation and takes a selective approach within the sector, showing preference for TCS among large-cap stocks, which is projected to maintain a margin range of 26-28 percent. HDFC Securities currently assigns an ‘add’ rating to the stock, with a target price of Rs 4,040.
“We have accounted for a 50 bps margin enhancement for FY26E, driven by rupee depreciation and disinflationary supply-side elements in a soft demand landscape. The TCV figure is expected to be muted due to the lack of significant mega deals (TCS at $11 billion),” HDFC Securities noted.
Regarding deals and contracts, SMIFS anticipates the TCV to fall between $11 billion (down from $13.2 billion in Q4FY24) due to the absence of substantial renewal deals.
Nirmal Bang Institutional Equities stated that while TCS has seen solid deal bookings, actual revenue conversion has been slow, affecting overall growth. They expect deal wins to remain steady between $10-11 billion, maintaining a ‘buy’ rating on TCS with a target price of Rs 3,973.
Key factors to monitor include client budgets for CY25, tariff impacts, project cancellations, delays, the pace of discretionary recovery, positive signs outside of BFSI, pricing pressures, and volume effects due to GenAI-driven automation, as mentioned by Nirmal Bang.
In conjunction with the results announcement, TCS’s board may propose a final dividend for the equity shares of the company for the financial year ending March 31, 2025, subject to shareholder approval at the upcoming annual general meeting (AGM), according to the company’s exchange filing.
For the current fiscal year, TCS has already declared three interim dividends of Rs 10 (in January 2025, October 2024, and July 2024) and a special dividend of Rs 66 (in January 2025) for its investors. TCS has delivered a dividend yield of 4 percent over the last 12 months, with a total payout of Rs 124 during this period, as reported by Axis Securities.
“We anticipate TCS to register -0.2 percent QoQ CC revenue growth and a -1 percent QoQ decline in USD due to a ramp-down in the BSNL project, offset by a strong rebound in developed markets,” asserted Nuvama Institutional Equities. “We expect margins to remain flat QoQ as the benefits from BSNL will lag. We are looking for stable deal wins and are particularly interested in the outlook on the US macro environment amid tariff uncertainties and the trajectory of margin recovery,” they added.
InCred Equities pointed out that challenges from reinvestments in the business, including the enhancement of the partnership ecosystem, could counterbalance margin advantages stemming from INR depreciation, changes in mix, and the reversal of furloughs. “The conversion of the deal pipeline, commentary on FSI, retail, and manufacturing verticals, as well as the large deal ramp-up outlook will be crucial to monitor,” they noted.
Investors should pay attention to comments regarding soft revenue in international markets, tariff impacts and the influence of weak macroeconomic conditions on business and FY26 outlook, any delays in projects, margin drivers, insights on financial services, and client spending trends in the US and Europe, according to SMIFS.
TCS shares closed at Rs 3246.10 on Thursday, down 1.44 percent for the day, with a total market capitalization nearing Rs 11.75 lakh crore. The Tata Group stock has declined approximately 30 percent from its 52-week high of Rs 4,585.90 reached in September 2024. Notably, the IT giant hit its 52-week low of Rs 3,060.25 earlier this month amidst the Trump tariff turmoil.
Dollar-denominated revenue growth for Tata Consultancy Services is expected to decline sequentially due to seasonality-driven weakness and an uncertain demand landscape, as highlighted by Elara Capital, which continues to list the stock as a top pick in the sector.
TCS may face some challenges leading to subdued growth. Mid-cap stocks are projected to continue outperforming large caps this quarter. Margins are expected to remain within a narrow range due to the lack of significant revenue growth, according to B&K Securities. “Policy uncertainty has caused clients to adopt a ‘wait and watch’ approach again, potentially leading to delayed ramp-ups and project deferrals,” they added.
India’s IT sector is anticipated to show lackluster performance in Q4FY25, with management expected to provide cautious guidance in the near term as clients reassess their businesses and curtail discretionary IT spending, stated Choice Broking. Recent tariff developments represent setbacks and are critical factors to monitor in the near to mid-term. Choice maintains a ‘buy’ rating on the stock, with a target price of Rs 4,236.
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