TCS, HCLTech Q1 results today: Here’s what you can expect

India’s largest IT services major Tata Consultancy Services is expected to report around 15% year-on-year growth in net profit, according to an ET poll of analysts, for the first quarter ended on June 30 in a quarter when the company’s margins may be negatively impacted due to the wage hikes. The company will announce its first quarter results on July 12 after market hours.

Revenue for the same period is expected to grow 13% year on year in a quarter when the company witnessed a large deal cancellation but also reported multiple large deals.

During the quarter, the company reported major deals from the likes of Nest UK, Standard Life, Marks and Spencers, Ikano Bank and Teacher’s pension among others.

Analysts will be watching for commentary on demand in key markets like the UK and US apart from further signs of deal rampdowns or cancellations.


“Demand uncertainty seen in the month of March has continued in the June 2023 quarter. TCS is seeing some project cancellations and postponements. Some right-shifted projects have started ramping up in June. Europe and the UK are growing well while there is more weakness in North America,” said a report by ICICI Securities.

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Operating margin is expected to be around 23.4%, down 30 basis points over last year and almost 110 bps over the previous quarter weighed down by wage hikes and reduced utilisation from project cancellations.

India’s third largest IT services major HCLTech will also announce results on the same day and is expected to report 17% growth in net profit and 14% growth in revenue over the year for the fiscal first quarter. “(HCLTech’s) ER&D segment was impacted by weakness in hi-tech and telecom verticals in March 2023 for a few days and the full quarter impact is likely in Q1FY24,” said a report by ICICI Securities. The brokerage expects a slowdown in discretionary spending to impact deal total contract value (TCV) for Q1.

Street expects some revision or narrowing of the HCL’s growth guidance for the fiscal year at 6-8%. Commentary on the timeline and quantum of annual increments will be awaited.

TCS however doesn’t give a growth guidance.

“Expect TCS to report revenue growth of 1.0% QoQ on CC basis, backed by strong order inflow of the last 12 months (consisting of large and mid-sized deals). It is likely to face cross-currency tailwind of around 45 bps on QoQ basis,” said a report by Nirmal Bang. The brokerage also called out margin pressures from salary hikes, travel expenses and marketing costs which are likely to be offset by higher utilization, pyramid benefits and lower subcontracting expenses.

Analysts will be looking for the new CEO K Krithivasan’s commentary on the large deals announced this quarter, pricing increases, margin benefits from the deals and the long term demand across key markets and sectors in North America, Europe and financial services.

The street will be watching hiring numbers by TCS closely. The company added just 821 employees in the last quarter and has been plagued by concerns around unfavorable hiring practices and onboarding delays of even experienced employees. Another quarter of low to negative hiring will point towards serious demand concerns for the company and the industry. TCS is the largest recruiter in the Indian IT services sector.