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Like Infosys, Will TCS Also Hike Dividend Payout for Shareholders

Like Infosys, will TCS also hike dividend payout for shareholders? on Business Standard. The Q4 numbers will be the first quarterly figures after Rajesh Gopinathan took over as CEO & MD

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Like Infosys, Will TCS Also Hike Dividend Payout for Shareholders

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  1. Like Infosys, will TCS also hike dividend payout for shareholders? Tata Consultancy Services (TCS) is set to announce its results for the fourth quarter ended March 2017 (Q4FY17), and full financial year 2016-17 (FY17) numbers on Tuesday. The numbers will be the first after Rajesh Gopinathan took over as the chief executive officer (CEO) and managing director (MD) on February 21, 2017 from N Chandrasekaran. Last week, Infosys kick-started the Q4FY17 earnings season for IT companies and disappointed the Street with its guidance. Infosys gave an operating profit margin guidance of 23-25 per cent for FY18 compared with 24-25 per cent in FY17, triggering earnings estimate for FY18 across a number of brokerages.

  2. Besides the Q4FY17 and FY17 numbers, the guidance for the next financial year and changes (if any) to its capital allocation policy will be equally important factor for the stock’s performance going ahead, analysts say. Here is what leading brokerages and research houses expect from TCS MOTILAL OSWAL RESEARCH Watch out for guidance / outlook from TCS. At TCS, while the commentary has remained very positive, it remains to be seen what the company guides for revenue growth. Our estimate of 9.5 per cent constant currency (CC) growth in FY18 implies a CC CQGR of 2.5 per cent in FY18. ICICI SECURITIES We expect EBIT margins to be flattish for TCS, led by currency headwind offset by operational efficiency. We would be monitoring how IT companies manage margins in the wake of increased US local hiring amid maintaining utilisation. US dollar revenues may grow 1.2 per cent q-o-q to $4,439.6 million, led by BSFI and some uptick in retail vertical. Constant currency may grow around 1.5 per cent q-o-q while rupee revenues may decline 0.1 per cent to Rs 29,701 crore. EBIT margins may remain unchanged q-o-q to 26 per cent owing to operational efficiency offset by currency headwind. FY18E outlook and margin guidance, IT budget spend pattern, traction in digital business and attrition are among the key things to watch out for. KOTAK INSTITUTIONAL EQUITIES We expect Indian IT companies to increase payout ratios (dividend + buybacks) and detail their capital allocation strategies. TCS has already taken the initiative on announcing a large buyback and may follow it up with detailing payout ratio in future. ARTICLE SOURCE – BUSINESS STANDARD

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