Tata Consultancy Services, India’s largest IT services company will announce its results for the fourth quarter of 2015-1026. Here’s a list of five things to watch out for when TCS submits its quarterly report card, later today:
1. Epic lawsuit
A US jury on Saturday said TCS and Tata America International had to pay $940 million for stealing trade secrets of Epic Systems. Though TCS has denied the charge and will appeal the verdict. But the company is going to face questions on it. The impact is already visible; the stock is marginally down in trade today.
2. Revenue growth
Brokerage BNP Paribas SA expects TCS’s revenue to rise 1.7% to $4.21 billion in the January-March period on a sequential basis. Any growth will bring some relief to investors as dollar revenue growth fell in the year-ago period. If it misses the estimates, this will be the seventh straight quarter that TCS will disappoint the market.
3. Weak links
Investors and analysts will want an update on the Japan business, as well as Diligenta, and what Chandrasekaran has in mind to turn them around. He had earlier indicated that Diligenta’s problems could end by the fourth quarter. Markets will also look for commentary on the BFSI segment, since rival Infosys showed weakness in this segment.
4. Currency fluctuation
Infosys’s comments indicate that IT firms expect the rupee to depreciate against the US dollar. TCS, which generates about 54% of its revenue from the US, should benefit, though a little less than Infosys that generates close to 61% of its revenue from that country. Management commentary on currencies and its impact will be important.
5. Show me the orders
During the July-September period, TCS claimed its order book was the strongest ever, with about 30% more than the company ever managed in any quarter. TCS, however, did not disclose its order book size. Considering it has been more than nine months since TCS talked about its huge order book, many believe the firm should start seeing business from the orders won in the second quarter of last year.
(With inputs from Livemint)