TCS Q3 results today: Check revenue projection, dividend, key expectations

TCS Q3 results today: Investor attention is likely to centre on TCS's commentary regarding client budgets and demand outlook for 2025.

In Short

• TCS Q3 results to focus on demand outlook, deal wins
• Analysts expect flat revenue growth, underperforming peers in Q3
• TCS likely to consider third interim dividend alongside quarterly results

Tata Consultancy Services Ltd (TCS) is set to announce its Q3 results later this evening, and investors are closely watching for updates on the near-term demand outlook, pricing environment, and the performance of key verticals such as Banking, Financial Services, and Insurance (BFSI).

Insights into deal wins and client budgets for 2025 will also be key focus areas.

EXPECTED REVENUE GROWTH

Analysts expect TCS to report flattish constant currency (CC) revenue growth, underperforming peers Infosys Ltd and HCL Technologies Ltd. It has attributed this to a lower revenue contribution from the BSNL deal and the impact of seasonal furloughs.

Despite these challenges, some of the revenue decline may be offset by the reversal of exceptional items from the previous quarter.

According to Motilal Oswal Financial Services (MOFSL), TCS is expected to post an 8.1% rise in adjusted net profit, amounting to Rs 12,730 crore, on a 6.4% increase in revenue to Rs 64,500 crore.

MOFSL also projects an EBIT margin of 24.5%. Nuvama, on the other hand, anticipates a profit of Rs 12,390 crore and revenue of Rs 64,129 crore. Meanwhile, Nirmal Bang estimates adjusted profit at Rs 12,744 crore and has recommended monitoring BFSI and Hi-tech vertical commentaries, as well as the spending outlook in European and UK geographies.

DEAL WINS

Deal wins for the quarter are expected to be in the $7-9 billion range, reflecting a lack of mega deal activity. Analysts also anticipate margin expansion of 20-40 basis points, driven by operating efficiencies and reduced costs related to the BSNL deal.

Elara Securities predicts that TCS, having already implemented wage hikes in Q1FY25, could see a 40bps QoQ margin improvement due to deceleration in BSNL deal-related costs.

DEMAND OUTLOOK

Investor attention is likely to centre on TCS’s commentary regarding client budgets and demand outlook for 2025.

The company’s perspective on macroeconomic challenges in Europe and the UK, as well as its strategy for navigating supply-side issues in manufacturing, will be closely monitored. Additionally, analysts are keen to hear updates on Gen AI project wins, which could influence growth trajectories.

DIVIDEND ANNOUNCEMENT

Alongside its quarterly results, TCS’s board will consider the third interim dividend for FY25.

If declared, the dividend will be paid to eligible shareholders whose names appear in the depositories’ records as of the record date, Friday, January 17.

WHAT IT MEANS FOR IT SECTOR?

The Q3 performance of TCS will likely set the tone for other IT companies, including Infosys Ltd, HCL Technologies Ltd, and Wipro Ltd. Analysts believe TCS’s results will provide valuable insights into the broader IT sector’s trajectory, particularly in a challenging global economic environment.

TCS shares have declined over 9% over the past month and were trading 1.57% at Rs 4,043.20 at around 1:30 pm.