The gains will come from a ramp-up in strong order signing with traction in the BFSI and retail segments in the previous quarter.
While Prabhudas Leeladhar’s (PL) profit after tax (PAT) estimate is the highest among brokerages, ICICI Securities’ April-June quarter revenue estimate tops the charts. Net profit of PL Rs. 12,310 crore while ICICI Securities’ revenue in rupees was Rs. 62,491 crores.
The company will announce its Q1 results on Thursday, July 11.
Here’s what they recommended:
Kotak Institutional Equities
Kotak estimates a 4.8% YoY jump in the company’s net sales to Rs. 62,229 crores while a sequential growth of 1.6%. Revenue growth will be driven by a ramp-up from strong order signings in the previous quarter. Brokerages expect weaker revenues in financial services and telecom. Adjusted Profit After Tax (PAT) grew by 8.7% YoY to Rs. 12,043 crore is expected to see a decline of 3.4% on a quarter-on-quarter basis.
Earnings before interest, tax, depreciation and amortization (EBITDA) for the reporting quarter stood at Rs. 16,572 crore which is likely to grow by 10.5% YoY and 3.5% QoQ.
Kotak forecasts a 140 bps QoQ decline in EBIT margin due to wage revisions and likely decline in utilization rates while forecasting 140 bps YoY growth in EBIT margin.
Deal wins are estimated at $11-12 billion due to a higher rate of take-out deal closings.
Prabhudas Leeladhar (PL)
Prabhudas’s net sales rose 4.6% YoY in Q1 to Rs. 62,120 crore is seen. On a QoQ basis, revenue is expected to grow 1.4%. PAT Rs. 12,310 crore which is expected to be 10.7% higher than the corresponding quarter of the previous fiscal. It is likely to be down 1.5% respectively.
The brokerage estimates EBIT margin at 24.9% up 170 bps versus a decline of 110 bps QoQ.
PL has an accumulated rating on the counter.
“Major deal ramp ups and progress in new logo additions to drive Q1 growth (1.4% QoQ CC). However, we expect margins to decline by 110 bps respectively due to compensation revisions and visa costs, though wage increases will be proportionate .lower than last year,” the PL note said.
ICICI Securities
ICICI Sec Income Rs. 62,491 crore which sees a 5.2% YoY growth while 2.1% QoQ growth is likely. Adjusted Net Profit Rs. 11,731 crore views, up 6% YoY and down 5.6% QoQ.
“We see 1.7% USD/1.8% CC QoQ revenue growth driven by BFSI, Retail (Consumer Business Group) and HiTech from deals announced in Q1,” ICICI Securities said in a note.
The brokerage also expects EBIT margin to decline by 186 bps QoQ on higher personnel costs – wage hikes to be implemented from April 1, 2024 and double-digit increases for top performers.
For TCS, management commentary on enterprise discretionary spending will be an important monitorable in Q1FY25 with fewer deal announcements, campus hiring, larger deals and turnaround in BFSI.
Antique
Brokerage Antique Stockbroking estimates TCS net sales for Q1FY2025 at Rs. 62,094 crore which would be 4.6% higher than Q1FY2024 and 1.4% higher on QoQ basis. As for the net profit for the reported quarter, TCS posted Rs. 11,853 crore, Antik said, estimating a 7% YoY growth and a 4.7% QoQ decline.
Meanwhile, EBITDA stood at Rs. 16,352 crore, up 9% YoY and down 4.7% QoQ.
Antique forecasts 1.5% revenue growth QoQ in constant currency with its USD revenue growth around 1.4% QoQ, with a 10 bps headwind from cross currencies. “We have made a similar contribution from BSNL as ramp-up may be slow due to elections. Margins are expected to decline by 170 bps to 24.3%, largely impacted by wage hike of 200 bps, partly due to operational efficiencies and lower sub-utilisation. is offset by the contract costs,” Antic said.
(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)
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