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TCS may post strong revenue growth

Forecast on 3.5-3.9% rise in revenues considering robust recovery in India

TCS to add around 80,000 freshers this year

TCS to add around 80,000 freshers this year

Bengaluru: Indian IT services major Tata Consultancy Services (TCS) will kickstart the earnings season for Indian Inc with announcement of its second quarter results on Friday. Analysts are of the opinion that the Tata Group company is likely to post strong set of numbers with higher sequential rise in revenues as compared to first quarter (April-June), when the deadly second wave of Covid pandemic disrupted the delivery in various locations.

Especially, the India business of TCS is likely to come back to growth path after severe disruption during Q1, leading to negative growth during this period. This was one of the prime reasons, impacting the top line.

As per brokerage firms, TCS is likely to post 3.5-3.9 per cent rise in revenues in sequential term in Q2 of FY22.

Most brokerages are also projecting a double-digit growth in net profit and revenue, led by improvement in demand from BFSI, healthcare and retail, acceleration in digital technologies and ramp-up of deals along with recovery from the India market.

"TCS is expected to continue its strong revenue traction for the quarter but margins are expected to be impacted due to lower utilisation and higher subcontracting costs. It is expected to register 3.5 per cent QoQ growth in constant currency led by improvement in demand from BFSI, healthcare and retail, acceleration in digital technologies and ramp up of deals and also recovery from India market, which declined 14 per cent QoQ in Q1," ICICI Securities wrote in a note.

The company is also likely to post healthy deal pipeline with strong Total Contract Value (TCV) number. TCS has bagged around six to nine large deals as per public announcement on exchanges during this quarter.

Investors will be keen to understand the outlook on sustainability of double-digit revenues, trends in digital revenues, margin outlook, talent management, offshoring trends, deal pipeline and other such long-term trends from the management. The board of TCS will also consider the interim dividend proposal during the board meet on October 8.

During the said quarter, the company has offered strong returns to investors with 13 per cent gains as against a 12 per cent rise in the NSE Nifty and 20 per cent in the Nifty IT pack. In the run up to second quarter results announcement, share price of TCS rose 2.3 per cent at Rs 3,898 on Thursday in NSE.

Debasis Mohapatra
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