Updated: Jul 17
Today's TCS Q1 results: On Friday, IT powerhouse Tata Consultancy Services (TCS) will consider paying an interim dividend to equity shareholders in addition to reporting its April-June FY2023 earnings. The interim dividend, if declared, will be paid to equity shareholders whose names are listed as beneficial owners of the shares as of Saturday, July 16, 2022, the record date set for the purpose, on the company's register of members or in the records of the depositories, according to a communication from TCS.
TCS gave cash back to shareholders for Rs 31,424 crore in 2021–2022 through buybacks and dividends. Additionally, a final dividend of Rs 22 per share was issued for the period from January to March.
What D-Street Expects
Analysts predict that the large IT company will record a double-digit increase in profit year over year on more than a 15% increase in revenues. Due to wage increases, margins are believed to be decreasing. The estimated total contract value is $9–10 billion.
According to Motilal Oswal Securities, TCS will record an adjusted net profit of Rs 10,050 crore, up 11.2% YoY (0.9%) from the previous quarter. Prabhudas Lilladher anticipates an increase in adjusted profit of 10.7% YoY to Rs 9,968 crore. According to Emkay Global, TCS's PAT will increase 10.5% year over year to Rs 9,958 crore. Edelweiss anticipates a profit increase of 7.4% YoY (2.2% QoQ) to Rs 9,703 crore.
Prabhudas Lilladher anticipates revenues to increase by 16.3% year over year to Rs 52,791 crore.
Ebit margin may decrease to 23.9% in the June quarter from 25.5% in the March quarter and 25.55% in the June quarter last year, according to Motilal Oswal, impacted by wage increases and ongoing supply-side constraints. According to Prabhudas Lilladher, TCS' Ebit margin is 24%. Emkay anticipates a 150 basis point decline in EBIT margin as a result of pay increases and rising travel and visa expenses. According to Phillip Capital, margins may drop 140 basis points sequentially. Also highlighted by this brokerage were pay increases, travel expenses, and supply-side pressures, all of which should be partially offset by rupee depreciation.
Should Investors Buy, Hold, or Sell?
Despite the anticipation for a great quarterly performance, the stock has recently been under selling pressure. According to data, the stock decreased by a little over 10% over the last three months. A day before the results, on Thursday, it closed 0.8% higher.
"Traders can deploy Naked call or bull spread, with puts being preferred," said Anand James, Chief Market Strategist at Geojit Financial Services. TCS has started to shake off the bearishness of the first half after routinely closing above or near the 20d SMA during the past ten days. Every month for the past two months,
Although there had been a short build-up along TCS' futures, there is no evidence of a short-covering, which has allowed the company to beat the Nifty and the IT index throughout the recovery from the most recent low on June 17th. The OI spectrum for Thursday reveals that options traders have changed their attitude and are now more optimistic, with a short build-up in PEs and a long build-up in distant OTM CEs. The most recent CE additions point to a 3.5-7.0% increase in TCS for the July expiry.