A confluence of deal ramp-ups, longer working days, positive cross-currency trends, and improving macroeconomic outlooks is expected to provide Tata Consultancy Services (TCS) with a strong revenue rise as it begins the Q1 FY25 reporting season. Estimates from 11 trading companies show that TCS's revenue in Q1 FY25 is expected to increase by 1.6 percent on a quarterly basis to Rs 61,237 crore.

A number of research publications predict that TCS's development would be aided by the momentum created by the BSNL transaction. In April, TCS disclosed that, as part of an agreement worth Rs 15,000 crore with Bharat Sanchar Nigam, it will establish sizable data centers in four different parts of the nation.

TCS Q1 FY25 PREVIEW

On July 11, TCS is expected to release its June quarter earnings. TCS is expected to experience a 3.5 percent decline in net profit for Q1 FY25, amounting to around Rs 11,999.45 crore, despite the sales gain.

The EBIT margin of TCS is predicted to decrease by 130 basis points on a quarterly basis to 24.7 percent, mainly as a result of pay increases that take effect on April 1 and a double-digit increase for top achievers, according to an average of 11 projections.

ESTIMATES OF BROKERAGE FOR Q1 OF FY25

Kotak Institutional Equities believes that a fall in utilization rates and wage adjustments would likely result in a quarter-over-quarter decline in operating profit. ICICI Securities stated that the BFSI, retail (consumer business group), and hi-tech sectors will be the main drivers of revenue growth in the June quarter.

The management's remarks on a number of important topics, including the demand climate across regions, discretionary expenditure, the lack of deal announcements in Q1 FY25, campus hiring, and big agreements, are highly anticipated by analysts. Brokerage companies will also need to focus heavily on information regarding cost takeout projects, the banking vertical, and the turnaround in BFSI. Investors will be closely observing how the GCC ramp-ups affect GDP, according to Kotak.

"TCS's main source of profit headwind is wage increases. In a research study, JM Financial stated, "We do anticipate that operational efficiencies will partially offset its impact."