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Forecast of poor Q1 show

Situation expected to improve only in third and fourth quarters
Top five IT players to report a decline in revenues of 3.7-7.5% sequentially
Top five IT players to report a decline in revenues of 3.7-7.5% sequentially

Our Special Correspondent   |   Mumbai   |   Published 09.07.20, 02:09 AM

IT giant Tata Consultancy Services (TCS) will kick off the results season on Thursday with the street expecting another poor quarter from corporate India because  of the lockdown. 

Analysts expect all the top tier tech companies to report a sequential decline in their revenues.

The companies are unlikely to give any specific guidance for the year given the uncertainty on the revival of the world economy. The focus will be on the management commentary relating to the deal pipeline and clients embracing digital transformation.

Analysts have forecast TCS to report a 5.5 per cent drop in revenues in dollar terms on a sequential basis. 

On a year-on year basis,  revenues in rupees of TCS could show a fall of three per cent. Profits are expected to come anywhere between Rs 7,100 crore and Rs 7,800 crore, an  annual decline of 4 per cent.

“We estimate the top five Indian IT players — TCS, Infosys, Wipro, Tech Mahindra and  HCL Technologies — to report 3.7-7.5 per cent quarter-on-quarter (QpQ) revenue decline in constant currency,  Edelweiss Securities said.

The brokerage expects margins of the top five companies to decline 20-110 basis points on a quarterly basis. “We believe the first quarter of 2020-21 is the peak pain quarter as already lockdowns have been relaxed to a certain extent in India and abroad.” 

Edelweiss said the situation would at best stabilise in the second quarter.

A report from Motilal Oswal said that despite the partial impact of Covid-19 in the fourth quarter of 2019-20, deal bookings at TCS were resilient. The brokerage said deal signings in the first quarter and the commentary around the deal pipeline were likely to be the key focus .

Aviation losses

Budget carrier IndiGo is expected to report a loss of Rs 2,670 crore for the June 2020 quarter, while its rival SpiceJet’s losses during the quarter are likely to be at around Rs 1,000 crore owing to operational disruptions and low fixed cost coverage, a report by brokerage Centrum said on Wednesday.

Banks are unlikely to see a sharp erosion in their bottomline as bad loans remained steady because of the moratorium.

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