TCS shares climb 3%, add Rs 31,000 crore to m-cap ahead of Q3 results

Shares of Tata Consultancy Services (TCS) climbed 3 per cent in Monday’s trade and topped Rs 12 lakh crore in market capitalisation (m-cap), ahead of the IT major’s  December quarter results. The stock rose 3.01 per cent to hit a high of Rs 3,308.95. The most-valued IT company’s market capitalisation rose to Rs 12,06,755 crore in early trade from Rs 11,75,287 crore on Friday, up Rs 31, 467 crore.

Reliance Securities expect the IT major to log a 15.3 per cent year-on-year (YoY) jump in net profit at Rs 11,261 crore compared with Rs 9,769 crore in the same quarter last year. Motilal Oswal Securities expects TCS’ bottom line to grow 14.4 per cent at Rs 11,220 crore. Dolat Capital Market pegs profit at Rs 11,012 crore, up 12.7 per cent YoY. Nuvama sees profit at Rs 11,377 crore, up 16.5 per cent YoY or 9.1 per cent QoQ.

Reliance Securities expects revenues for the IT major climbing 17.6 per cent YoY to 57,496 crore from Rs 48,885 crore in the year-ago quarter. Emkay Global sees revenue jumping 16.6 per cent YoY to Rs 56,993 crore.

In constant currency terms, TCS is expected to report a 1.9 per cent sequential revenue growth in CC terms compared with a likely 1.2 per cent growth for Infosys, 3 per cent growth for HCL Tech and 1.2 per cent growth for Wipro, as per Nuvama estimates. Reliance Securities sees CC revenue growth at at 1.6 per cent.            

Nuvama sees dollar revenue growth for TCS at 1.6 per cent QoQ. Reliance Securities sees dollar revenues for TCS rising 1.8 per cent QoQ at $7,003 million ($7 billion).

In terms of margins, the TCS management had earlier indicated the focus was on improving margins. The benefits of lower sub-contracts and higher billable freshers, and rupee depreciation, should aid margin sequentially, Investec said.

Investec expects Ebit margin to improve to 24.8 per cent against 24 per cent in September quarter and 25.6 per cent in the year-ago quarter. ICICIdirect sees margin for the IT firm coming in at 24.2 per cent, due to easing of supply side pressure.

TCS reported a total contract value (TCV) of $8.1 billion in the September quarter, which included only one large deal. Nirmal Bang believes the deal wins were flattish or lower in the December quarter on account of delays seen in decision making, especially on longer term deals.

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