TCS seems to be on a weak wicket today; the reason being the not-so-rosy picture for Q4. Based on the synopsis of the Conference Call with analysts it had scheduled on 5th March, the company has stated that it expects Q4FY15 revenue to be comparable YoY, expecting Retail, manufacturing and Hi-tech segments to lead the recovery. It expects telecom to remain volatile and degrowth in energy. The weakness seen in Diligenta and insurance is also expected to continue. It expects EBIT margins to remain unchanged at around 27%.

The company’s performance was not too encouraging in Q3 with its  revenue (dollar) showing a meagre 0.5% growth (QoQ nat $3.93 billion but in terms of rupee, revenue rose just 3% at Rs.24,501 crore and this was mainly on account of rupee depreciation. In terms of profitability, net profit (dollar) was flat, up by just 0.1% at $873 million and in rupee terms, rose 3% at Rs.5444 crore. Its volume growth too was much below expectations at 0.4%, which is a huge let down from Infosys’s volume growth of 4.2% reported for current Q3. The only redeeming part – EBITDA margins rose 20 bps to 27% and this was the only thing which came in line with estimations. This expansion in margins was led by higher realizations. Other income rose 74% at Rs.1503 crore and this includes forex gain of Rs.241 crore, which helped boost the rupee bottomline growth.

Post the call, Religare stated that Q4 is likely to be another soft quarter from TCS, and with expectations already high and it see’s downside risks to earnings. Based on this conclusion, it has downgraded the stock from “buy” to “hold”.

The stock is down over 1.5% at Rs.2653, with an intra day low at Rs.2611.80.