Motilal Oswal
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January 10, 2019 08:21 AM | Earnings

TCS Q3 results today: Constant currency growth likely to weaken, margins seen higher


Software major Tata Consultancy Services (TCS) will report its third-quarter earnings after market hours today and analysts' expect constant currency growth to weaken on account of seasonality.

  • The numbers should be out post market hours closer to 5o’clock. The stock has been a big outperformer, having rallied close to about 40 percent in the last one year and outperforming the Nifty IT, which rallied close to about 20 percent mainly because the company has been reporting good numbers. It is on track to end FY19 with a double digit growth.



  • In Q2, its constant currency growth was at 11.5 percent. This quarter that is Q3, the momentum will weaken on account of seasonality year-end furloughs. So analysts are working with a dollar revenue growth of 1.2 percent. In constant currency, it should be a growth of 1.7-2 percent, which is lower than the 3.7 percent growth that it had in Q2 that is on a quarter-on-quarter (Q-o-Q) basis. However, compared to last year, the growth will look better because December quarter of last year had a growth of 1.3 percent.



  • Margins will be slightly higher by 20 basis points (bps) aided by rupee depreciation. Rupee has depreciated a little more than 2 percent on an average this quarter. Margins will continue to be within the company’s guided band of 26-28 percent for the second consecutive quarter.



  • According to CNBC-TV18’s poll, profits should be higher by close to about 3.5 percent. Street will very closely watch for any kind of management commentary on the outlook for the calendar year 2019.

 

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