TCS seen beating Infosys again, shares hit all-time high

Shares in Tata Consultancy Services rose for a third straight day on hopes of strong quarterly earnings due later on Tuesday. TCS has emerged as the industry bellwether for India's over $100 billion IT industry after Bangalore-based Infosys lost ground in recent quarters.

Brokers polled by NDTV expect TCS to report a net profit of Rs 4,552 crore on sales of Rs 20,896 crore in the July to September. India's biggest outsourcer had reported profits of Rs 3,831 crore on sales of Rs 17,990 crore in the June quarter.

US dollars sales, a measure of real demand, likely grew 5.5 per cent sequentially to $3340 million as against $3160 million in the June quarter. Infosys, which posted-better-than expected results last week, had reported a 3.8 per cent rise in dollar revenues.

Operating (EBIT) margins are expected at 29.4 per cent as against 26.9 per cent in the June quarter on account of the sharp depreciation in the Indian rupee. TCS had hiked wages in April unlike Infosys, which saw a hit in margins in the September quarter because of wage hikes announced in June. TCS may report 4 per cent growth in volumes in the second quarter.

Sharp cross currency movement may result in losses on hedges to the tune of Rs 300-400 crore, brokers estimated.

TCS, part of the salt-to-steel Tata conglomerate, India's biggest business house, does not give a revenue forecast, but expects to grow faster than the industry. That is typically taken to mean the industry lobby group National Association of Software and Services Companies' outlook for exports growth, pegged at a 12-14 per cent this financial year.

In contrast, Infosys is expected to underperform the IT industry despite narrowing its annual revenue guidance forecast from 6-10 per cent to 9-10 per cent.

Shares in TCS, the largest Indian company by market capitalisation, traded near life-time highs at Rs 2,229 as of 12.26 p.m. (Track stock)