TCS second quarter performance forecast: BSNL trading net profit is expected to increase by about 4% month-on-month, and revenue will increase by more than 2% month-on-month

Tata Consultancy Services (TCS), India’s largest information technology (IT) company, will announce its second-quarter fiscal 2025 earnings on October 10. In key transactions, especially BSNL transactions.

TCS revenue is expected to grow 2.2% in the June-September quarter of FY25 $64,011 Crores Rs. $According to a survey of six brokerages, revenue in the last quarter was 62,613 crore rupees. Revenue in U.S. dollars is likely to increase 2% sequentially, from $7,505 to $7.648 billion.

Constant currency (CC) revenue growth is expected to be around 1.2% QoQ, driven by rising BFSI projects in the US and ongoing BSNL deal. Analysts estimate that the BSNL deal will bring incremental contribution of about $75 million.

“Growth is expected to be led by higher transaction sizes, including incremental pick-up in BSNL trades and BFSI in North America. The trading pipeline should remain healthy. There are some positive moves in BFSI, but weakness in the UK needs to be monitored,” said brokerage Motilal Oswal.

Revenue from other businesses is likely to remain stable as challenges in Europe are offset by some improvement in US BFSI.

Net profit of IT heavyweights in Q2 FY25 is expected to grow by 3.5% to $12,461 Crores Rs. $120.4 billion rupees quarter-on-quarter.

margin

At the operational level, TCS second-quarter earnings before interest and tax (EBIT) is expected to grow 3.1% to $15,916 Crores Rs. $15,442 Crores on a quarter-on-quarter basis.

EBIT margins are likely to be of concern as subdued growth in developed markets and lower margins on BSNL deals will act as major headwinds. Therefore, while MOFSL expects EBIT margins to fall by 20 basis points, ICICI Securities expects margins to expand by 49 basis points sequentially in the absence of wage hikes. The depreciation of the Indian rupee is also expected to be a driver for margins.

“The headwinds for the quarter were lower utilization and shift in revenue mix towards lower margin BSNL contracts. Note that Q1 margins include a one-time impact of 35 basis points from election trust contributions. We expect to win 10 billion in transactions, which is down from the September 2023 quarter. Note that last year’s TCV data contained large transactions with a heavy renewal component,” Kotak Institutional Equity said in a note.

Looking ahead, the focus will be on the European outlook, which remains challenging despite a number of large deal wins over the past year.

Investors will also look at the outlook for the financial services vertical and any share losses from onsourcing of large clients, spending profile in UK and European markets and signs of improving demand, deal pipeline, status of discretionary spending and what steps need to be taken, according to Kotak Equities The rise of the GCC has had the same impact on corporate growth and the leverage to defend and improve margins, it said.

On Wednesday, TCS shares rose 0.12% to $4,256.25 each on BSE.

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