TCS, Infosys Q4 earnings tomorrow: What to expect as IT majors release results same day for first time

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Updated: April 11, 2019 5:52:27 PM

Kicking off the earnings season, IT sector heavyweights Infosys and Tata Consultancy Services (TCS) will announce their results Friday.

TCS, HDFC, Infosys, Reliance Industries, Kotak Mahindra Bank, market capThe growth in the IT sector will be reasonable but margin outlook will be closely watched.

Kicking off the earnings season, IT sector heavyweights Infosys and Tata Consultancy Services (TCS) will announce their results Friday, first time ever on the same day. Even as March quarter remained muted for IT companies, Reliance Capital expects software services companies to post good earnings.

The growth in the IT sector will be reasonable but margin outlook will be closely watched, it said. HCL Technologies is expected to be the top performed in Q4 among the peers in the sector, it noted.

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“Q4 is not a strong quarter seasonally but we estimate the USD growth to be ~2.2% QoQ and CC currency growth to be similar. The top-5 IT firms are likely to post 2%-3% QoQ USD and CC revenue growth with HCL Technologies (HCLT) likely to lead the pack (3%),” the brokerage said.

Reliance Securities expect Sonata Software to outperform with 7 per cent on-quarter US dollar revenue growth, while Cyient will underperform (-1.3% QoQ) among mid-sized companies.

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“The key focus area for the quarter will be margin outlook for FY20 as margins have come under pressure in the recent quarters. Out top result plays are HCL Tech and Sonata Software,” the brokerage added.

In Q3, Infosys had reported an operating margin of 22.6 per cent, 110 basis points narrower than the 23.7 per cent in the previous quarter. The operating margin of TCS had also narrowed by 90 basis points to 25.6 per cent in October-December quarter compared to 26.5 per cent in the July-September quarter.

Meanwhile, Infosys and TCS ended the day 1 per cent lower ahead of Q4 results tomorrow.

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