TCS Q4 results on 12 April; From Dividend to focus on guidance, know about everything

Also TCS board will also be recommending a final dividend, if any, on the equity shares of the Company for the fiscal year ending March 31, 2024.

The dividend expectations remain strong as at the end of the year ago quarter TCS had declared ₹24 a share as dividend taking total dividend to ₹69 for FY23.  At the end of the December’23, quarter , TCS has declared dividend of   ₹18 translating to a dividend yield of 1.78%. 

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Caution prevails on IT sector

The IT companies are likely to feel growth challenges during the January to March’2024 quarter too. The rate of furlough recovery remains slow and there is ongoing pressure on discretionary IT expenditures. The cut in guidance by Accenture has already added to investors and analyst concerns.

Analysts predict  Q4FY24 to be a moderate quarter with muted growth, although the same in line with expectations and factored by the stocks.

 Analysts at Nuvama Institutional Equities in their Q4 preview said that “Revenue growth is likely to be between -1.5% and +4.5%  dragged by a gradual reversal of furloughs and lower discretionary tech spends”.

TCS better placed

However Tata Consultancy Services (TCS) is still likely to see some revenue growth. on sequential basis. 

Analysts at Jefferies India Pvt Ltd in their result preview have said that “Aggregate revenue growth in 4QFY24 should remain weak at 0.3% sequentially in constant currency terms , with only TCS and Coforge likely to post sequential growth. 

TCS as per Jefferies is likely to report 1.4% sequential growth in revenues on sequential basis in constant currency terms. This will be led by deal rampups. 

Analysts at Nuvama also expect TCS along with a few others to report modest growth (1.0%–2.5%).

JM Financial analysts expect constant currency, sales growth to come at 1% which coupled with 30bps cross-currency tailwinds, will mean revenue growth of 1.3% sequentially.  

Meanwhile the deal flows may also keep margins stable while lower attrition may actually lead to some improvement in the margins.

JM Finanial analysts expect 20bps sequential and 70bps year-on-year expansion in EBIT margin to 25.2% led by better utilisation and lower expenses, offsetting lower margins. The Net profit is likely to grow 5.3% year-on-year though flat on sequential basis.

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Focus to shift to FY25 Outlook

As deal wins are likely to remain strong for TCS. All the focus nevertheless will be FY25 outlook,]. 

The demand outlook and the CY24 budgets should be the main topics of discussion said analysts. Demand recovery will probably be TCS’s main priority, particularly in the BFSI vertical.

Analysts at Jefferies said that “FY25 revenue growth guidance ranges may be lower than expected, which could drive earnings cuts for IT companies”

Nevertheless those at Nuvama said that “ They expect FY25 revenue growth to be moderately better than FY24 – laying the foundations for a strong FY26 for IT companies”. 

The retail and high-tech industries are expected to bounce back first, while  manufacturing has continued to be strong .

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Published: 03 Apr 2024, 05:06 PM IST