Tata Consultancy Services (TCS), the country’s top software exporter, is seen maintaining its lead over Infosys in April-June when they announce quarterly results on Thursday.
Analysts expect revenue of TCS to increase, while that of Infosys to be flat on quarter. Though the quarter is likely to be muted for both the companies, they expect TCS to outperform their peers in terms of volume growth.
Broking firm Motilal Oswal estimates TCS’s volumes to grow 4 percent whereas Infosys’s to be as low as 0.7 percent. On the revenue front, TCS is likely to do better than Infosys with an expected revenue growth of 3 percent to $2,744 million compared with the previous quarter.
Infosys, on the other hand, is expected to post a flat quarter in terms of revenue to $1,771 million. In rupee terms, TCS is expected to post 11 percent revenue growth to Rs 147.3 billion.
TCS is likely to steal the lead because of the deals it has won in BFSI and telecom sectors.
The key things to watch out for from the company are the commentary on hiring and margin performance.
“We expect (TCS) EBIT margin to expand just 70bp QoQ to 28.4 percent, despite the currency benefits because of offsets from wage hikes, visa cost and higher employee expenses emanating from bringing some people onboard as a part of signing large contracts,” Motilal Oswal said in its report.
There has been strong speculation that Infosys may cut its guidance. Analysts at Motilal Oswal predict that despite of the rupee advantage and no wage hikes, its EBITDA will decline by 30 basis points. In Rupee terms, revenue estimates stand at Rs 9,560 core, up 8 percent QoQ, entirely due to the rupee depreciation.
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