TCS seen outpacing sector after profit spurt

MUMBAI Wed Apr 17, 2013 8:55pm IST

1 of 2. A man walks out of the office of Tata Consultancy Services (TCS) in Mumbai April 17, 2013.

Credit: Reuters/Vivek Prakash

Related Topics

Stocks

   

MUMBAI (Reuters) - Tata Consultancy Services (TCS) (TCS.NS), India's top software services provider, lifted quarterly profit by more than a fifth and painted a more bullish picture for future revenue growth than key rival Infosys (INFY.NS).

TCS said it expects revenue in the current fiscal year to increase more than the 12-14 percent sector export growth forecast by the National Association of Software and Services Companies (Nasscom).

Infosys Ltd on Friday missed expectations with a forecast of 6-10 percent growth in dollar revenue, sending its shares tumbling.

Earlier on Wednesday, fourth-ranked HCL Technologies Ltd (HCLT.NS) said March quarter profit rose 73 percent, beating estimates, although its shares ended 1.5 percent lower.

"There is a wedge forming between performers and not so good performers in the sector. Given the way the U.S. economy is recovering, this augurs well for the performers like TCS," said Anshu Kapoor, head of private wealth management at brokerage Edelweiss in Mumbai.

Infosys, the No.2 player in India's $108 billion IT services industry, has struggled to implement a strategy of generating a higher proportion of revenue from its own software platforms. By contrast, TCS has focused on more traditional outsourcing.

Tata's net profit for the fiscal fourth quarter ended March 31 rose 22 percent to 35.97 billion rupees from 29.46 billion rupees in the year-earlier period, as it won orders from customers including Nokia (NOK1V.HE) and BNP Paribas (BNPP.PA).

That was roughly in line with an average earnings estimate of 36.2 billion rupees among 20 analysts polled by Thomson Reuters I/B/E/S.

RATTLED INVESTORS

Sector investors have been rattled by Infosys' guidance, pending U.S. legislation that would make it more expensive to send workers there on temporary visas, and a rising rupee fuelled by the global slump in commodities, which pushes down overseas revenue in local currency terms.

The BSE IT services index fell 1.14 percent on Wednesday ahead of the TCS results, underperforming the broader market, which was down 0.07 percent.

TCS grew its business volume by 4.4 percent from the previous quarter, compared with 1.8 percent growth at Infosys.

The company said it added 52 new clients in the quarter and that the pipeline of large potential deals has grown.

(Additional reporting by Harichandan Arakali in Bangalore and Sumeet Chatterjee in Mumbai; Editing by David Cowell)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Pharma Deal

Pharma Deal

Sun Pharmaceutical wins U.S. approval to buy Ranbaxy  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage