Today, TCS will present its third-quarter financial results

Tata Consultancy Services (TCS), a major player in the IT sector, is slated to release its financial results today, kicking off the earnings season. According to experts, third-quarter weakness is typically caused by seasonality. Investors should also be aware of the difficult economic climate, as analysts anticipate a slight recession this year.

Businesses having significant exposure to Europe will profit in Q4 from the favorable changes in the euro/dollar exchange rate. TCS and Wipro are more exposed to Europe than the other top-5 companies, whereas Mastek, KPIT, Coforge, FSOL, and Cyient are more exposed than the other midcap companies, according to Anand Rathi.

Earnings forecasts

Due to the effects of normal seasonality, BNP Paribas anticipates TCS’ revenue for the December 2022 quarter to total $6,974 million, an increase of 1.4% quarter over quarter. It anticipates that the IT major’s revenue will increase by 3.1% (QoQ) to 570,293 million rupees.

Anand Rathi anticipates TCS’s sales to be $6,978 million in US dollars and its PAT to be 10,943 crores.

Axis Securities anticipates sales in rupee terms to reach 57,280 crores, up 3.6% from the quarter that ended on September 30.

The brokerage anticipates a third-quarter EBITDA margin of 26.6%, compared to the second quarter’s 26.2%.

As supply-side difficulties subside and utilization and efficiency levers take effect, BNP Paribas
anticipates that the EBIT margin will increase by 33 bps (QoQ) to 24.3%.

---

Read Also – IND vs SL: Suryakumar Yadav broke numerous records as soon as he scored a century and

---

stock price target

TCS and Infosys are our top stock pick due to their strong execution records and digital capabilities, according to BNP Paribas.

TCS has a buy recommendation from BNP Paribas, and their target price is 3,314.65. “Sharper-than-expected decline in global economic activity and GDP growth, margin pressure from increased competition, moderation in demand leading to a higher-than-expected impact on margin, and sustained appreciation of the INR vs. the USD are downside risks to our DCF-based TP,” the brokerage stated.

What to be wary of:

• Trends in industry demand over the medium term and the effect of macro headwinds on demand
• Market analysis for the US and Europe
• Deal pipeline; deal wins
• Margin forecasting
• A pricing situation

The third interim dividend for FY23 will be up for discussion on January 9 by the board of directors, as TCS has already announced. For the purpose of determining which shareholders are eligible for the third interim dividend, the business has set January 17 as the record date.