TCS Set to Kickstart Q4 Earnings Season With Muted Show; Seasonal Blues, Deal Delays To Drag

India's bellwether IT services company, Tata Consultancy Services (TCS), is expected to report a revenue decline, flat EBIT margins, and a muted Total Contract Value (TCV) as it publishes fourth-quarter earnings report for the financial year 2024–25 (Q4 FY25), according to brokerages.

The Tata Group’s flagship firm will kick off a mixed quarterly earnings season — traditionally known for softer demand, project delays, and fewer billing hours. This time, however, it unfolds against a backdrop of geopolitical uncertainty, with former U.S. President Donald Trump’s tariff threats looming large over global business sentiment.

"We forecast that the tariff-led elevated level of uncertainty shall reflect in the commentary and guidance provided by companies," Nuvama Institutional Equities noted in its Q4 IT sector preview.

The brokerage added that Q4 FY25 will likely see sequential revenue declines for large-cap companies like Infosys, TCS, and HCLTech, while mid-cap firms could deliver strong organic growth of 0–4% quarter-on-quarter (QoQ).

"Margins shall largely remain stable with slight improvements for most companies, except for those affected by seasonality or wage hikes (Infosys, HCL Tech, and LTTS)," a Singapore-based brokerage firm added.

What Brokerages Expect from TCS Q4

In the previous quarter (Q3), TCS reported a 12% year-over-year increase in net profit to Rs 12,380 crore, while revenue rose 5.6% to Rs 63,973 crore — slightly missing analyst expectations. This quarter, however, expectations have been scaled back. Brokerages foresee a cautious performance weighed down by seasonal headwinds and the tapering of the BSNL deal.

According to Motilal Oswal, TCS is expected to post a 0.5% QoQ decline in constant currency revenue, primarily due to the BSNL project ramp-down. While the BFSI vertical is expected to remain relatively stable, manufacturing could stay weak. On margins, Motilal said, “EBIT margin may remain flat QoQ, aided by operational efficiencies, despite headwinds from talent investments.”

The brokerage added that cost benefits from early pyramid hiring and the tapering BSNL-related costs should offer some margin support.

Nuvama Institutional Equities forecasts a 0.2% decline in constant currency revenue and a 1% drop in dollar terms. The BSNL taper-down remains the key drag, although partially offset by a “strong rebound in developed markets.” Margins are expected to remain flat, with tailwinds from BSNL tapering accruing in subsequent quarters.

“We will watch out for the outlook on US macro amid the tariff uncertainty and the margin recovery trajectory,” Nuvama said.

IDBI Capital projects a 1.2% QoQ drop in dollar revenue due to seasonality, including furloughs, and the absence of BSNL-related income. However, it expects a 33 basis point improvement in EBIT margin, citing operational efficiencies. Key areas to monitor include the deal pipeline, hiring and offshoring trends, GenAI initiatives, and the US and European banking outlook.

Elara Capital expects TCS to report flat revenue in constant currency, with a 0.5% decline in DOLLAR terms, attributing it to weak demand and continued BSNL moderation.

Systematix Institutional Equities echoes this view, predicting a slight revenue dip in dollar terms driven by BSNL tapering and Q4 seasonality. However, it sees a “resilient TCV and a steady revival in discretionary spends,” and estimates a modest 20 bps margin expansion due to reduced equipment and software expenses.

Similar Fate for Infosys, HCLTech, Wipro

As TCS braces for a subdued Q4, its peers — Infosys, HCLTech, and Wipro — are expected to mirror the trend, with brokerages projecting revenue declines due to seasonal pressures, weak discretionary demand, and deal slowdowns.

Motilal Oswal expects Infosys to report a 1.0% drop in dollar revenue and 0.5% in constant currency. HCLTech is seen posting a 0.6% QoQ decline due to the tapering of telecom deals and seasonal weakness in its Products & Platforms business. Wipro is expected to report flat revenue, while Tech Mahindra may see a 0.8% QoQ drop. LTIMindtree could deliver 0.2% growth in constant currency, although a “productivity pass-back in a key account” may offset gains.

Nuvama predicts all top-five IT players will post QoQ revenue declines in constant currency terms, citing seasonal and exceptional challenges. It expects HCLTech and Tech Mahindra to fall by 0.7% each and Wipro by 0.4%. “HCLT will face seasonal weakness, while Tech Mahindra and Wipro continue to deal with company-level execution issues,” Nuvama stated.

HDFC Securities also expects subdued performance, projecting QoQ revenue changes ranging from -1.8% to +0.1% for large-cap IT firms. “Infosys is expected to lead the decline with a 1.8% drop, followed by approximately 0.5% QoQ dips for TCS, HCLTech, Wipro, and Tech Mahindra,” HDFC said. On a year-on-year basis, Tier-1 IT firms are expected to report growth in the range of -1.6% to +6%.