How stock markets will react to TCS earnings on Thursday?
- In Q4FY23, TCS posted a consolidated net profit of ₹11,392 crore, up by 14.76% compared to a profit of ₹9,926 crore in Q4 of the previous fiscal. While consolidated revenue of ₹59,162 crore, rising by 16.94% from ₹50,591 crore in Q4 of the previous fiscal.
Tata Consultancy Services (TCS) announced its Q4 results after market hours on Wednesday. Ahead of the quarterly earnings report, both Sensex and Nifty 50 extended their gains for eight consecutive days. IT stocks rallied with broad-based buying across the basket. However, TCS missed Street's expectations in Q4 despite posting double-digit year-on-year growth in revenue and PAT.
On Wednesday, Sensex closed at 60,392.77 up by 235.05 points or 0.39%. Nifty 50 finished at 17,812.40 up by 90.10 points or 0.51%.
The Nifty IT index rallied by 304.55 points or 1.06% to end at 28,980.30. Infosys was the top gainer soaring by 1.6% followed by Coforge up 1.5%, LTI Mindtree, and Mphasis up 1.2% each. Persistent Systems and TCS gained 1% each. HCL Tech, Wipro, and LTTS surged between 0.5% to 0.8% as well.
In Q4FY23, TCS posted a consolidated net profit of ₹11,392 crore, up by 14.76% compared to a profit of ₹9,926 crore in Q4 of the previous fiscal. This profit is attributable to the shareholders of the company. In Q3FY23, the PAT stood at ₹10,846 crore.
On the top-line front, TCS garnered a consolidated revenue of ₹59,162 crore, rising by 16.94% from ₹50,591 crore in Q4 of the previous fiscal. The company posted revenue of ₹58,229 crore in December 2022 quarter. In constant currency, the review growth stood at 10.7% YoY.
During Q4, TCS' net margins expanded to 19.3%, while operating margins stood flat at 24.5%.
TCS recorded an all-time high number of large deals in Q4FY23. The company's order book comes at $10 billion. For the full year FY23, the company's order book comes at $34.1 billion.
On TCS earnings, Manish Chowdhury, Head of Research at Stoxbox said, TCS's fourth-quarter numbers are mostly on the disappointing side. In a difficult operating environment, the company reported revenue growth at a multi-quarter low. The company also surprisingly reported flat EBIT margins versus expectations of an improvement. We feel that the North American business remains weak which is visible from dismal net additions in the workforce. The difficult macroeconomic environment is clearly evident from the cautious commentary of the management and would take few quarters before we see normalization in the overall business performance."
What to expect from markets?
According to Ajit Mishra, VP - of Technical Research, Religare Broking said, Participants will react to TCS numbers in early trade on Thursday and the performance of other IT majors will also be in focus. As of now, the rotational buying across index heavyweights is helping the index to inch higher and we feel the prevailing trend to continue with some intermediate consolidation. Traders should accordingly align their positions and maintain focus on overnight risk management."
Santosh Meena, Head of Research, Swastika Investmart said, “it was the eighth straight session of gains for the Nifty and Sensex thanks to stable global cues, buying in the cash market, and short covering in the F&O market by FIIs. Nifty Pharma showed some muscle today on the back of rising exports and fresh worries about COVID-19. In addition, fertiliser and sugar stocks were doing well in the broader market. The market will digest lots of cues at its opening tomorrow, where the inflation numbers of the USA and ours will be a key factor and the results of TCS will be another important factor.”
According to Rohan Patil, Technical Analyst, SAMCO Securities, Bulls will aim to take over the positive baton to Thursday's weekly expiry trade and continue to close the markets in the green. The overall trend remains in a bullish mode and any dip in the index will be an opportunity to enter fresh long. The support for the Nifty is placed at around 17,600–17,650 levels and resistance are capped at 17,900--17950 levels.In case the Nifty breach is below 17,600 levels than 17,400 will be the next support zone.
Investors will also focus on Q4 numbers of Infosys which is scheduled to be announced on Thursday.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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