TCS share price slumps ahead of Q1 results; here’s what to expect from IT giant’s earnings

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Published: July 9, 2019 3:16:18 PM

Shares of India's largest IT behemoth slumped in trade on Tuesday, ahead of the firm's Q1 results scheduled to be reported later in the day.

Six of top-10 firms add Rs 34,250 crore in m-cap; TCS leadsTCS share price slumped nearly 4% to hit the day’s low at Rs 2,090 on BSE this afternoon.

Shares of India’s largest IT behemoth slumped in trade on Tuesday, ahead of the firm’s Q1 results scheduled to be reported later in the day. TCS share price slumped nearly 4% to hit the day’s low at Rs 2,090 on BSE this afternoon. According to experts, the top Indian IT firms are expected to report tepid results as wage hike, stronger Indian rupee and high attrition are likely to weigh. “We expect constant currency revenue growth of 3.2% and cross currency headwinds of 50bps. We expect TCS to post broad-based revenue growth and expect strong deal momentum to continue,” Prabhudas Lilladher said in a note. Wage hikes seasonally drag margins in the first quarter of a fiscal. 

Also read: Rakesh Jhunjhunwala’s favourite shares see worst fall in 6 years after gold prices hit jewellery demand in Q1

Brokerage firm Motilal Oswal expects TCS to deliver revenue growth rate of 2.5% on-quarter in constant currency terms. “Most verticals for TCS are doing well; there may be a few pockets of weakness in BFS, which will be partially offset by growth in Insurance,” said the firm in its report. Motilal Oswal has a nuetral rating on the shares with a target stock price of Rs 2,130, implying a 5% correction from the current price levels.

“Our PAT estimate of Rs 76.7 billion is lower QoQ by 5.6% due to lower operating margin,” said the firm further. Brokerage firm Kotak Securities expects EBIT margin decline of 30 bps QoQ due to investments in business, rupee appreciation and higher visa costs partially offset by margin tailwind from reduced hedge losses on account of better hedge rates. The key things to wathc out would be TCS’s outlook and visibility for double-digit growth in FY20, the commentary on BFSI, trajectory of margins amid rising sub-contractor expenses and a low base in terms of start to FY20, noted Motilal Oswal.

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