India’s largest IT services exporter, Tata Consultancy Services (TCS) Ltd., is all set to kickstart the Nifty 50 earnings season for the March quarter on Thursday, April 10. As a bellwether for the Indian IT sector, TCS’ results are closely watched not just for its own performance but also for signals on broader IT sector trends, global client sentiment, and emerging tech focus.

Revenue Growth Outlook: Flat Performance Ahead

TCS is expected to post flat constant currency revenue growth in the March quarter. The impact of the BSNL project ramp-down continues to be a drag on revenue, but this is likely to be partially offset by strong traction in developed markets such as the US and Europe.

In US Dollar terms, analysts expect a sequential revenue decline of 0.8%. The subdued growth pattern mirrors a cautious tech-spending environment from global clients, though there are early signs of discretionary spend revival.

For FY25, TCS is likely to post a 3.8% to 4% rise in dollar revenue, reflecting gradual stabilization and recovery across verticals.

Margins and Profitability: Rupee Helps Support Margins

Despite the slowdown in revenue, TCS' operating margin is expected to expand by 30 basis points, helped by a depreciating rupee and strong cost control measures.

Net profit and EBIT (Earnings Before Interest and Taxes) are both expected to grow at a low-single-digit rate quarter-on-quarter, underlining a relatively stable but unexciting bottom-line performance for the quarter.

Key Metrics to Watch in TCS Q4 Earnings

Investors and analysts will keep a close eye on the following:

• Total Contract Value (TCV): A critical indicator of the company's business pipeline and client confidence.

• Deal Pipeline and Conversions: Whether clients are moving from discussion to closure amid uncertain global conditions.

• Hiring and Offshoring Trends: Clarity on headcount additions, lateral hiring, and campus intake, especially after major promotions and upskilling efforts in FY24.

• EBIT Margin Outlook: Management commentary on sustainability of margins, especially given rising wage pressure and discretionary investments.

• Generative AI Trends: The biggest growth lever for the future; TCS’ strategy on AI, including new use cases, client deployments, and internal upskilling.

• Banking and Regional Market Growth: Performance of the BFSI segment in the US and Europe, where revival is underway.

• Cost Take-out Deals: Strategic opportunities where clients seek efficiency, making way for large vendor consolidation and transformation-led contracts.

What TCS Management Said Last Quarter

In Q3 FY24, K Krithivasan, CEO and MD of TCS, expressed confidence in long-term growth:

“We are pleased with the excellent TCV performance... BFSI and CBG returning to growth, early signs of revival in discretionary spend in some verticals give us confidence for the future.”

Samir Seksaria, CFO, added:

“TCS’s strong execution, cost management and deft currency risk management helped deliver healthy margin improvement.”

Milind Lakkad, CHRO, highlighted their massive upskilling efforts:

“We promoted over 25,000 associates this quarter... Our campus hiring for the year is going according to plan.”

These statements reaffirm TCS’ long-term focus on transformation, talent development, and strategic investments in next-gen technologies.

Stock Performance and Market Sentiment

TCS shares gained 2.22% on Tuesday to close at ₹3,346.80, ahead of its results. However, the stock is down nearly 20% year-to-date in 2025, as investors remain cautious about the IT sector’s muted growth trajectory.

Despite this, any positive surprises in deal wins, margin stability, or optimistic commentary on GenAI and cost take-out deals could lift sentiments in the near term.

Focus on Generative AI and Digital Transformation

TCS has doubled down on investments in AI, GenAI platforms, and partnerships to capture future demand. These innovations are expected to unlock new revenue streams and strengthen client relationships across key verticals like BFSI, retail, and healthcare.

The company's AI strategy now spans use-case development, co-innovation with clients, employee training programs, and building dedicated GenAI labs. The Q4 earnings may offer insights into early wins from these initiatives.

What Lies Ahead for FY25

With global IT demand gradually recovering, TCS is entering FY25 with cautious optimism. A solid deal pipeline, proactive cost management, and growing focus on AI-led transformation could help it weather short-term uncertainties.

At the same time, currency fluctuations, client budget delays, and talent retention remain potential headwinds.

Conclusion

As the first major IT player to report earnings for Q4 FY24, TCS’ performance and outlook will set the tone for the broader tech sector. Investors will watch closely not only for financial numbers but also for management’s forward-looking commentary on growth levers like GenAI, global market recovery, and margin stability.

Whether the stock can recover from its year-to-date losses will depend on how convincingly TCS can articulate its future-readiness in an evolving tech world.

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