TCS shares gained nearly 3 per cent in Thursday’s intraday trade ahead of the September-quarter earnings announcement. The stock reached a high of Rs 2,142 on the BSE. Investors now focus on potential margin improvements and the company’s expected second interim dividend for FY27 as the IT sector results start.
Shares of Tata Consultancy Services (TCS), India's largest IT services company, gained nearly 3 per cent in Thursday's intraday trade as investors positioned themselves ahead of the company's September-quarter earnings announcement.
TCS shares climbed to a day's high of Rs 2,142 on the BSE, up 2.8 per cent from the previous close of Rs 2,084. At 1:45 PM, the stock was trading at Rs 2,105, higher by 1.19 per cent.
The gains in TCS also came amid a broader recovery in IT stocks. HCL Technologies, Tech Mahindra and Wipro advanced more than 1 per cent each, helping the Nifty IT pack gain around 2 per cent even as the broader market remained under pressure.
TCS is expected to kick off the September-quarter earnings season for the IT sector with modest sequential revenue growth. Analysts expect the company's performance to reflect a slower-than-expected recovery in the latter part of the quarter amid continued geopolitical uncertainty.
According to Zee Business estimates, TCS is likely to report revenue of around $7,656 million for Q2FY27, compared with $7,624 million in the previous quarter. This would translate into sequential growth of around 0.4 per cent.
In rupee terms, revenue is estimated at Rs 73,173 crore, compared with Rs 72,275 crore in Q1FY27, representing growth of around 1.2 per cent.
While revenue growth is expected to remain muted, profitability is likely to improve during the quarter.
TCS' earnings before interest and tax (EBIT) are estimated to increase 3.2 per cent sequentially to Rs 17,872 crore from Rs 17,317 crore in the June quarter.
The EBIT margin is expected to expand to 24.4 per cent from 24 per cent in Q1FY27. A favourable base and easing pressure from wage hikes are expected to support margins.
Net profit is estimated to rise 5 per cent sequentially to Rs 14,020 crore from Rs 13,349 crore in the previous quarter.
Apart from the earnings numbers, investors will also track the company's dividend announcement. TCS' board is expected to consider a second interim dividend for FY27 along with the September-quarter results.
The dividend decision could therefore be another key factor for investors tracking the IT major when it announces its financial performance.
TCS share price: What investors are watching
The stock's gains ahead of the results indicate that investors are looking beyond the expected moderation in revenue growth and focusing on the potential improvement in margins and profitability.
The commentary on demand, deal wins, discretionary spending and the pace of recovery in the second half of the fiscal year will be closely watched when TCS reports its Q2 numbers.