On April 9, 2025, Tata Consultancy Services (TCS) experienced a downturn in its share price, just one day before the company is set to unveil its financial results for the March quarter. Opening at ₹3,276, the stock slid by 2.4% to ₹3,215.90 during the trading session, reflecting investor caution ahead of the anticipated earnings report. By around 2 PM, TCS shares were trading at ₹3,256.65, marking a 1.12% decline.
Insights on TCS Q4 Earnings
As analysts prepare for TCS’s Q4FY25 earnings announcement, expectations are mixed due to ongoing regulatory challenges and economic instability. Market observers predict that these factors could significantly affect the IT sector’s performance, particularly in the forthcoming fiscal year 2026.
- Expected Revenue Decline: Analysts from Motilal Oswal Financial Services forecast a 0.5% quarter-on-quarter reduction in revenue in constant currency, driven by the tapering of BSNL operations.
- Operating Margins: The EBIT margin is expected to remain flat, supported by enhanced operational efficiencies, despite potential pressures from talent investments.
- Sector Performance: While TCS’s Banking, Financial Services, and Insurance (BFSI) sector is anticipated to perform robustly, the manufacturing segment may show signs of weakness.
Challenges Ahead for TCS
Experts highlight that the Indian IT sector is grappling with a myriad of challenges, including trade tensions and a cautious U.S. economic outlook. Despite these hurdles, TCS, being a dominant player in the IT landscape, is expected to navigate these turbulent waters effectively. According to Atul Parakh, CEO of Bigul, "TCS’s upcoming earnings announcement on April 10 is expected to reveal modest revenue growth and improved margins, but caution remains due to tariff uncertainties and the U.S. growth outlook."
- Revenue Sources: TCS relies heavily on North America for 47.7% of its total revenue, with the UK contributing 16%, and the remaining revenue distributed across India (9%), the Asia-Pacific, and the Middle East (7.8%) along with Europe (13.9%).
Investment Strategies for TCS Stock
In light of the current market conditions, VLA Ambala, co-founder of Stock Market Today, suggests that TCS presents opportunities for swing trading. For long-term investors, she recommends considering strategic purchases during dips of 10% or more.
- Potential Strategies: Ambala outlines two key strategies:
- Neutral Options: Buying at-the-money calls and puts with an anticipated movement of 5% to 7% in the near term.
- Long Positions: Initiating long positions covered with puts to capitalize on potential upward movement.
Technical Analysis of TCS
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi, notes that TCS is currently trading near a critical support level, coinciding with the 50% Fibonacci retracement from its March 2020 low of approximately ₹1,506 to its August 2024 peak of around ₹4,592. This area is significant due to its historical demand.
- Price Movements: If TCS closes above ₹3,400, it may push towards ₹3,700. However, a weekly close below ₹3,050 could trigger additional selling pressure.
Market Outlook
Ravi Singh, Senior Vice President of Retail Research at Religare Broking, emphasizes that TCS has tested its major support level of ₹3,000 and remains in a "sell on rise" mode. He advises investors to maintain strict stop-loss orders at this level while suggesting a "Vega positive strategy" involving selling and buying put options to create a long-put calendar.
As TCS prepares to share its financial results, all eyes will be on how it navigates these challenges and what guidance it offers for the future. Investors are encouraged to stay informed and consider market fluctuations carefully.
For more insights on market trends, continue exploring our financial news section.
