TCS Q4 Results: Profit drops, claims to weather tech demand storm with AI adoption; annual revenue crosses $30 bn

Kotak Institutional Equities said, “We attempt to estimate stock prices at which IT stocks can bottom out in case of a near-term recession. A recession in the current setup will be influenced by unique economic and technological factors: the outcome for IT stocks need not be similar to the previous recessions. We estimate a 22-38% downside to the current FVs and a 18-35% downside compared to CMPs for stocks under coverage, assuming no tariff on services exports. TCS, followed by Infosys, HCLT and Coforge, have lower downside compared to CMP.”

Mirae Asset Sharekhan said, “TCS, Wipro, Tech Mahindra and HCL Tech, are expected to decline 0.3%/0.5%/0.6% and 0.7% QoQ in CC respectively while LTIM is expected to deliver marginal revenue growth of 0.2% QoQ in CC terms. EBIT margins for TCS and LTIM are expected to improve ~30 bps each QoQ.

According to the brokerage firm, TCS is expected to record Q4 sales at Rs 64,962 crore, up 6.1% on-year. Its operating margin is estimated at 27.0%. Net profit, it added, is projected at Rs 12,673 crore, recording a growth of 1.9% YoY.

InCred Equities said that services CC growth could be offset by the decline in BSNL revenue and absence of non-recurring license revenue recognized in Q3FY25. USD revenue decline to be led by cross-currency headwinds.

Headwinds from re-investments in business, including strengthening of partnership ecosystem, could offset margin tailwinds from INR depreciation, change in mix, and reversal of furloughs.

Key monitorable, it added, include conversion of deal pipeline, FSI, retail & manufacturing vertical commentary, and large deal ramp-up outlook.

Shares of Tata Consultancy Services (TCS) were down 1.44 per cent at a trading price of Rs 3,246.10. It is worth noting that the stock market is shut today for Mahavir Jayanti.

According to Kotak Institutional Equities, investor focus will be on:

(1) impact of tariffs and recent chain of macro deterioration in the US on business and outlook for FY2026,

(2) reasons for underperformance in growth in developed markets,

(3) any projects cancellations or delays since January 2025 and its impact on FY2026 growth outlook,

(4) outlook in the financial services vertical and any loss of share to insourcing at large clients,

(5) state of spending in the UK and Europe markets and signs of improvement in demand,

(6) impact of GCC ramp-up on growth of companies, and

(7) levers to defend and increase margins.

Kotak Institutional Equities said, “We forecast flat revenues in c/c for the international business and $30 mn decline in BSNL revenues. The net result is 0.3% decline in revenues in c/c. The benefit of rupee depreciation will be eaten away by promotions and investments in business, resulting in disappointing margin performance. We expect steady deal wins of $11 bn. This is a decline from $13.2 bn last year, which included certain large renewals. Focus will be on reasons for struggle for growth in international business, which has been insipid due to ramp-downs and modest deal wins.”

TCS had earlier announced that the company will recommend a final dividend today. While announcing the Q3 earnings report, TCS had declared a dividend per share of 76.00 including the third interim dividend of Rs 10 and Rs 66.00 as special dividend.

For the third quarter of FY25, TCS had reported a 12 per cent YoY growth in profit at Rs 12,380 crore. The revenue from operations stood at Rs 63,973 crore, up 5.60 per cent as against Rs 60,583 crore during the third quarter of FY24. The IT major also announced a dividend per share of 76.00 including the third interim dividend of Rs 10 and Rs 66.00 as special dividend. TCS’ workforce stood at 607,354 as on December 31st and has a diverse workforce with 35.3 per cent women and employees of 152 nationalities.

JM Financial said that in the IT sector, top-6 players are expected to report (120)-10 bps QoQ margin expansion. “Barring USD-INR depreciation (tailwind) and lower working days (headwind), each player is battling its own set of puts and takes. For TCS, the benefit of BSNL ramp-down is offset by reinvestment into talent and infra,” it said. While maintaining that cc revenue growth is expected at -0.1 per cent with 50bps cross currency tailwind translating into -0.6 per cent QoQ USD revenue growth. “We estimate $75 million decline in BSNL deal; ex regional markets (where BSNL is housed), we expect +1 per cent cc QoQ. On margins, we expect TCS to reinvest margin benefit from BSNL decline into talent and infrastructure,” the brokerage firm said.

Estimates on TCS Q4 Earnings:

Revenue

Rs 64351.00 crore; Up 5.1%

Profit

Rs 12356.70 crore; Down 0.6%

EBIT

Rs 15711.60 core, Down 1.3%

In an exchange filing on March 28, TCS had announced the date for the board meeting. It had said, “Pursuant to Regulation 29(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby inform you that a meeting of the Board of Directors of Tata Consultancy Services Limited is scheduled to be held on Thursday, April 10, 2025, inter alia to:

i. approve and take on record the audited standalone financial results of the Company under Indian Accounting Standards (Ind AS) for the financial year ending March 31, 2025;

ii. approve and take on record the audited consolidated financial results of the Company and its subsidiaries under Ind AS for the financial year ending March 31, 2025; and

iii. recommend a final dividend, if any, on the equity shares of the Company for the financial year ending March 31, 2025, for the approval of the shareholders at the ensuing 30th Annual General Meeting.”

Good Morning! The fiscal fourth quarter earnings season is all set to kickstart with IT major Tata Consultancy Services (TCS) all set to announce key numbers today. We, at FinancialExpress.com, will keep a close eye on TCS numbers and through this live blog, bring to you all the expectations, key numbers, management commentary, dividend announcement, and even analysis of these numbers. Stay tuned.