Q3 Strong Showdown: TCS vs Infosys Earnings, Jan 11 Preview

Introduction:- On Thursday, January 11, Tata Consultancy Services Ltd (TCS) and Infosys Ltd, the largest and second-largest domestic software exporters,.

Introduction:-

On Thursday, January 11, Tata Consultancy Services Ltd (TCS) and Infosys Ltd, the largest and second-largest domestic software exporters, will unveil their Q3 results.

TCS’s board will also discuss the possibility of an interim dividend for FY24 alongside its quarterly results.

Analysts anticipate limited positive outcomes for the quarter due to increased furloughs in the seasonally weak period

The impact of wage hikes on margins, and a conservative outlook in commentaries.

The market eagerly awaits insights into these tech giants’ performance during this crucial reporting period.

TCS and Infosys Q3 Projections:-

In the upcoming quarterly reports, Sharekhan anticipates Infosys to witness an 8% year-on-year decrease in net profit

While projecting an 8.2% profit growth for TCS.

Despite both companies expecting a decline in year-on-year operating profit margin

Infosys might experience a more significant drop of around 100 basis points.

Conversely, TCS is expected to show an improvement in margins sequentially.

Q3

In terms of revenue, Infosys is projected to report steady sales, while TCS may see a 3.2% rise in revenue in rupee terms.

Sharekhan notes that TCS’s revenue growth might be subdued at 0.3% in constant currency terms due to furloughs, partially offset by contributions from the BSNL deal.

They expect a 25 basis points quarter-on-quarter improvement in EBIT margins, driven by operational efficiencies.

For Infosys, a 1.8% revenue decline in constant currency terms is predicted due to discretionary spend cuts and furloughs Q3.

With around 20 basis points cross-currency headwinds.

EBIT margins are expected to decline by 95 basis points quarter-on-quarter due to wage hikes and weaker revenues.

Axis Securities forecasts a 6.6% year-on-year rise in TCS’s profit at Rs 11,561 crore, along with a 4.1% increase in sales at Rs 60,594 crore.

They anticipate order bookings within the typical $7-9 billion range.

For Infosys, a 7.6% year-on-year drop in profit at Rs 6,087 crore is expected, accompanied by a 1.4% rise in sales at Rs 38,844 crore.

As these tech giants release their financial results, the market closely awaits insights into their financial performance and strategic outlooks.

TCS Q3 Performance and Outlook Analysis:-

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For TCS, BNP Paribas is closely monitoring the BFSI vertical’s performance and medium-term industry demand trends.

The impact of macro headwinds on demand and commentary on the US and Europe markets, client budgets, deal wins, deal pipeline.

Investments in GenAI partnerships, and the BSNL deal ramp-up are key areas of interest.

The brokerage is particularly interested in insights on impacted verticals such as BFSI, retail, hi-tech, and telecom.

Additionally, they are seeking the FY24 revenue and margin outlook, assessing the risk of macro headwinds on demand

Understanding the demand outlook, and exploring reasons for the cancellation of the $1.5 billion AI deal.

BNP Paribas emphasizes the importance of any commentary regarding the core markets’ (US and Europe) performance and client budgets.

They are keenly watching for the timeline of large deal win ramp-ups, updates on the pipeline

And insights into investments in GenAI partnerships and solutions.

These aspects hold significance in shaping the understanding of TCS’s strategic positioning and performance in critical market segments.

Q3 Strong Showdown: TCS vs Infosys Earnings, Jan 11 Preview 2 Q3 Strong Showdown: TCS vs Infosys Earnings, Jan 11 Preview

TCS 3rd quarter result timing:-

TCS is set to reveal its results after market hours on Thursday, followed by a press conference at 5:30 pm.

The event will be broadcasted live on business news channels and TCS’ website and YouTube channel.

Subsequently, at 7:30 pm IST, TCS will conduct an earnings conference call.

During this session, the leadership team will delve into the financial performance and respond to analysts’ questions.

Infosys 3rd quarter result timing:-

Infosys is scheduled to announce its results around 3:45 pm IST.

Followed by a press conference at 4:30 pm IST where the leadership team will address media queries.

The live stream of this interaction will be available on the Investor Relations section of Infosys’ website.

With the archive accessible after 6:30 pm IST.

Subsequently, Infosys will conduct a 60-minute conference call at 6:30 pm.

During which the senior management will discuss the company’s performance and answer participant questions.

This event will be webcast live on the Investor Relations section of Infosys’ website, and the archive will be accessible after 8:30 pm IST.

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