TCS net seen rising to Rs 3,765 cr in Q1, shares down

Tata Consultancy Services' June quarter net profit is likely to rise 4.7 per cent sequentially to Rs 3,765 crore according to a brokers' poll by NDTV. Consolidated sales for the quarter are seen rising 7.2 per cent quarter-on-quarter to Rs 17,620 crore.

TCS, India's biggest outsourcer, had reported a net profit of Rs 3,596 crore on sales of Rs 16,430 crore in the March quarter.

TCS shares, which have gained for six straight days, traded 0.5 per cent lower at Rs 1,665 as of 11.22 a.m. underperforming the broader BSE IT benchmark. TCS is India's most valued firm in terms of market capitalisation and shares in the company are trading near life-time highs.

Dollar revenues, the most important indicator of real demand, are seen rising 3.4 per cent sequentially to $3145 million. Infosys had reported a 2.7 per cent sequential rise in dollar sales (at $1991 million) last week.
 
EBITDA margins are seen flat at 26.45 per cent against 26.50 per cent in the March quarter, while volume growth is seen rising 4-4.5 per cent sequentially.

TCS is expected to report a forex loss of Rs 30 crore, with a 50-60 basis points hit coming from adverse cross currency movement. The impact of wage hike, which came into effect on April 1, will be offset by gains arising from the rupee weakness.


Here's what leading brokerages expect from TCS Q1.

1) Nomura has a "reduce" rating on TCS because of high valuation and on concerns about the U.S. Immigration Bill.

"Any moderation in demand or margin commentary at TCS would be taken negatively by the Street and could lead to shrinkage in premiums on valuations, in our view," the brokerage said.

2) Ambit expects TCS to lead revenue growth among tier-1 firms.

3) ICICI Securities says ALTI's revenue, the French technology services company TCS acquired for over 75 million euro (Rs 530 crore) in April, will be consolidated from the second quarter onwards.