Indian IT siren TCS to unfold its Q1 story shortly

Tata Consultancy Services (TCS) is poised to come up with its books on Q1 performance and despite an air of faith on its performing strong as always, stocks of the company fared on a rather weaker side at Tuesday opening session of the market.

A majority of market analysts expect the firm to continue its strong performance. However, Dalal Street will watch out for BFSI demand outlook. TCS has been reporting weak demand from its banking, financial services, and insurance verticals for some time now.

In the quarter ended March 31, TCS reported above company-average growth in all its verticals except BFSI, but CEO Rajesh Gopinathan had said the company was more “optimistic” about the vertical in this financial year.

Analysts will watch for commentary on the demand outlook for calendar 2018 budgets, especially for BFS. However, keenly watched will be the commentary on BFS recovery, green shoots of which were cited in the previous quarter.

The third important index is going to be margin outlook of the company. TCS expected last quarter that its margin might remain at 26-28 percent, but given increasing protectionism, onsite investments, wage hikes and visa costs, analysts will also look for commentary on how the company plans to maintain its forecast.

Some other analysts may focus more on its share of the digital business. This segment contributed 23.8 percent of revenue in the March-ended quarter and saw a growth of 42.8 percent on an annual basis.

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