Good morning and happy Friday to you!
This is the daily morning update from NDTV Profit. Here’s everything you need to know at the start of your day.
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The big talking point at the start today is going to be earnings—and specifically IT earnings—after Tata Consultancy Services Ltd. reported its financial results for the third quarter. But we’ll come back to that in just a bit.
First, the cues from overseas. US bond yields have cooled just a little from an eight-month high on Thursday and the dollar strengthened further. It was a curtailed session for the bond market in the US, as markets were shut to honour President Jimmy Carter who passed away at the end of last year.
The yield on the 10-year Treasury fell from the previous close to 4.679%. It had hit a high of 4.73% on Wednesday, which was the highest since April last year.
It’s going to be an interesting end to the trading week, with the US markets set to react to the monthly payrolls data, which will be out later today. That’s expected to provide clues on the Fed’s policy outlook. Markets are currently fully pricing in just one 25-basis-point rate cut in 2025.
Japanese Household Spending
Meanwhile, in the Asia Pacific region, Japanese household spending fell in November, according to government data. It’s been weighed down by stubbornly high prices that dissuaded consumers from spending.
Consumer spending dropped 0.4% in November from a year earlier, slightly better than the median market forecast for a 0.6% decline. On a seasonally adjusted, month-on-month basis, however, spending increased 0.4%, versus an expected 0.9% fall. The early risers in the Asia Pacific region have started on the back foot. The Nikkei 225 was lower by a percent, last I checked. And you should also watch for the movement in the Yen. It’s dropped over 5% against the dollar since the start of December. The Australian equity benchmark was lower by half a percent, while the Kospi was flat.
TCS Q3 Results
In the top news back home, Tata Consultancy Services’ net profit rose 4.1% sequentially to Rs 12,444 crore in the third quarter, in line with expectations. The consensus estimate had pegged it at Rs 12,537 crore. Remember, the third quarter is usually a weak one for Indian IT. Revenue from operations declined 0.4% sequentially to Rs 63,973 crore in the third quarter, a little lower than the consensus expectations, which had it pegged at 64,749.
The quarter saw a margin expansion of 40 basis points to 24.5%. The company’s Total Contract Value stood at $10.2 billion, with a book to bill ratio of 1.4. In the previous quarter, it had stood at $8.6 billion.
Crucially, the company is expecting 2025 to be better than last year as it sees early signs of revival in discretionary spending in some business verticals amid easing macroeconomic uncertainty. TCS is committed to the 26–28% margin guidance and aims to come closer to 26% mark in the near future.
In other earnings, Tata Elxsi reported a 13% increase in net profit to Rs 229 crore, on the back of a 1.7% decline in revenue. There was a margin contraction to 23.5%.
IREDA, meanwhile, has seen a revenue uptick of over 35% and a net profit rise of 27% to over Rs 425 crore.
Watch out for gas stocks today — a change in the domestic gas allocation by the government will reverse some of the earlier impact of a deallocation, which took place towards the end of last year. Domestic gas is available at a fixed price and is cheaper than the spot market. The latest update, post market hours, was for Mahanagar Gas Ltd. and Adani Total Gas Ltd. In market hours, there was an update for Indraprastha Gas Ltd.
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