Tata Consultancy Services profit rises on U.S. demand

BANGALORE/MUMBAI Thu Jul 18, 2013 8:41pm IST

1 of 2. Tata Consultancy Services (TCS) Chief Executive N. Chandrasekaran speaks during a news conference in Mumbai July 18, 2013.

Credit: Reuters/Vivek Prakash

Related Topics

Stocks

   

BANGALORE/MUMBAI (Reuters) - Tata Consultancy Services (TCS.NS), India's largest software services exporter, posted a 17 percent rise in quarterly profit and maintained an upbeat outlook, fuelled by demand from the United States.

TCS's results, driven by its highest sales volume growth in seven quarters, reinforce expectations that Indian IT vendors will be helped by the strongest demand from U.S. businesses since the end of the 2008-9 financial crisis.

The United States is the biggest market for India's $108 billion IT sector.

"Our pipeline is very very good, not only in the U.S. but also elsewhere," Chief Executive N Chandrasekaran told reporters after the company released results for its financial first quarter.

TCS, part of the salt-to-steel Tata conglomerate, India's biggest business house, does not give a revenue forecast, but Chandrasekaran maintained his earlier view that the company will grow faster than the industry.

That is typically taken to mean the industry lobby group National Association of Software and Services Companies' outlook for exports growth, pegged at a 12-14 percent this financial year.

Consolidated net profit for the quarter ended June 30 rose to 38.31 billion rupees from 32.8 billion rupees a year earlier. That topped the 37.8 billion rupees average of 24 analyst estimates, according to Thomson Reuters I/B/E/S.

"I think demand should get a little bit better from here onwards. If the U.S. economy is moving in the right direction in its own growth, then it definitely aids the Indian providers," said Kuldeep Koul, an analyst at ICICI Securities.

Sales rose 21 percent over the year-earlier period to 179.9 billion rupees and operating margins rose 50 basis points over the previous quarter to 26.9 percent.

The U.S. outlook for Indian IT outsourcers is clouded by pending immigration legislation that could make it more difficult and expensive to send workers there on temporary visas, a important element of the industry's business model.

Last week, rival Infosys(INFY.NS) posted-better-than expected results. Bangalore-based Infosys, which had lost ground to TCS in recent quarters, was cautiously optimistic about client spending on its services after beating profit estimates and retaining its sales forecast for the year ending in March.

TCS, whose customers include Citigroup(C.N), BP PLC(BP.L), and AstraZeneca PLC(AZN.L), announced its results after the Mumbai markets closed. Its shares were down about 1 percent compared with a 1 percent gain in the overall index.

(Editing by Tony Munroe and Erica Billingham)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
amma wrote:
Excellent performance by TCS.
Hope they recognize the middle level consultants efforts also and promote them rather than just promoting till first 2 levels and ignoring completely after that.

Jul 18, 2013 6:48pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

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