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Synopsis: TCS is set to release its Q4 and FY25 results on April 10, 2025, with key investor focus on margins, deal wins, FY26 guidance, and dividend outlook. Despite challenges like lower deal conversions and tariff-related uncertainty, analysts remain cautiously optimistic, maintaining ‘buy’ or ‘add’ ratings with targets ranging from 3,973 to 4,236.
Tata Consultancy Services (TCS), India’s largest IT services company, is all set to release its financial results for the fourth quarter and the full financial year ended March 31, 2025, on April 10, 2025. As the first major IT firm to declare results this earnings season, TCS's performance is expected to set the tone for the broader sector amid ongoing concerns about weak demand and global macro uncertainties.
Investors are keeping a close watch on several critical indicators including the company's operating margins, total contract value (TCV), guidance for FY26, and attrition levels. Analysts expect a muted quarter due to the lack of large deal renewals and subdued client spending in the face of ongoing global challenges like tariffs, rising operational costs, and economic uncertainty, especially in developed markets.
HDFC Securities has maintained its ‘add’ rating on the stock with a target price of 4,040, anticipating a 50 basis points margin improvement in FY26 supported by rupee depreciation and easing supply-side pressures. It expects TCS to maintain its margin band between 26% and 28%, even in a soft demand environment. Meanwhile, SMIFS projects the total contract value for Q4FY25 to come in around $11 billion, down from $13.2 billion in the same quarter last year due to the absence of mega deal renewals. Similarly, Nirmal Bang Institutional Equities pointed out that while TCS has reported strong deal bookings, the conversion of those deals into revenue has been slower than expected, which is affecting growth. It expects deal wins to be steady between $10 and $11 billion and has issued a ‘buy’ rating with a target of 3,973.
The company is also expected to comment on key client behavior, including budget allocations for CY25, delays or cancellations of discretionary projects, and pricing pressure arising from GenAI-led automation. The broader outlook on client spending, especially in the U.S. and European markets, will be closely monitored.
Alongside its earnings, the TCS board may also propose a final dividend for FY25. So far, the company has declared three interim dividends of 10 each (in July 2024, October 2024, and January 2025), along with a special dividend of 66 in January. According to Axis Securities, this has contributed to a dividend yield of 4% with a total payout of 124 in the past year.
Market sentiment around TCS has been mixed. The company’s stock closed at 3,246.10 on April 9, 2025, down 1.44% for the day, and has seen a nearly 30% decline from its 52-week high of 4,585.90 touched in September 2024. TCS hit its 52-week low of 3,060.25 earlier this month, largely due to the market reaction to U.S. tariff concerns. Despite these challenges, some brokerage houses continue to back TCS, considering it a top pick due to its resilience and long-term fundamentals. Elara Capital, for instance, has retained the stock as one of its preferred bets in the IT space despite predicting a sequential decline in dollar-denominated revenue.
On the operational side, Nuvama Institutional Equities expects a 0.2% quarter-on-quarter decline in constant currency revenue and a 1% drop in dollar terms, primarily due to the BSNL project ramp-down. However, they anticipate a rebound in developed markets. The firm expects margins to stay flat, with lagging benefits from the BSNL deal, and is particularly interested in the outlook for U.S. macro conditions and margin recovery.
InCred Equities believes that the company’s reinvestments in expanding partnerships and ecosystem building could weigh on margins, offsetting some of the positive effects from currency depreciation and a favorable project mix. Commentary on the financial services, retail, and manufacturing verticals, as well as visibility on deal pipeline conversion, will be key elements in the management's outlook.
Meanwhile, B&K Securities notes that midcap IT players may continue to outperform large caps like TCS in this quarter due to their more agile operations. It expects TCS to face margin pressure and delays in deal ramp-ups as policy uncertainty causes clients to adopt a more cautious approach.
Lastly, Choice Broking has echoed a cautious outlook for the entire Indian IT sector in Q4FY25, with managements expected to issue conservative guidance for the near term. Clients are reassessing their IT budgets and cutting back on discretionary spending, particularly in response to the recent wave of tariff measures. Nonetheless, the brokerage maintains a ‘buy’ rating on TCS with a higher target price of 4,236.
As the results are declared, market participants will be keenly evaluating how TCS navigates the uncertain demand environment while maintaining profitability and investor returns.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Please consult a certified financial advisor before making any investment decisions.
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