TCS Q3 Results Preview: Net profit likely to rise 8% as rupee weakness, easing attrition aid margin

TCS Q3 Earnings Preview: Tata Consultancy Services (TCS) -- the country's largest IT company -- is all set to kick off the earnings season on Monday. The IT giant is likely to report a net profit of Rs 11,270 crore for the October-December period, according to Zee Business research, which translates to a sequential increase of eight per cent. For the quarter ended September, TCS had posted a net profit of Rs 10,431 crore. 

According to Zee Business research, TCS is likely to report a 3.6 per cent quarter-on-quarter rise in revenue to Rs 57,280 crore. Its revenue in dollar terms is pegged at $6,970 million for the quarter ended December as against $6,877 million for the previous three months -- marking growth of 1.4 per cent.

Revenue in constant currency terms is likely to increase 1.6 per cent compared with the previous quarter. 

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Tata Consultancy Services' earnings before interest and taxes (EBIT) are estimated at Rs 14,070 crore for the October-December period from Rs 13,279 crore for the quarter ended September 2022, according to Zee Business research. 

The IT major's margin -- a key measure of profitability -- is likely to improve by 60 basis points sequentially to 24.6 per cent, aided by weakness in the rupee against the US dollar and easing attrition. 

Despite robust demand, IT companies have been reeling under margin pressure owing to increasing employee costs emanating from higher levels of attrition. 

Furloughs at TCS in the October-December period are expected to come in higher given the earlier trend, according to Zee Business research. 

Analysts will closely watch out for deal wins, and the management's outlook on margin and commentary on pricing.  

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