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:

Economic Pulse

REUTERS SHOWCASE

Nifty Above 8,600

Nifty Above 8,600

Nifty hits record high above 8,600; state-run lenders gain  Full Article 

Indian in Iraq

Indian in Iraq

India says no contact with 39 men held by Islamic State in Iraq.  Full Article 

Sahara Issue

Sahara Issue

Sahara looks to raise $650 million loan to fund bail.  Full Article 

Bhopal Tragedy

Bhopal Tragedy

Bhopal's toxic legacy lives on, 30 years after industrial disaster.  Full Article 

Essar Group

Essar Group

Exclusive - Essar's planned oil-for-steel deal tests Iran sanctions  Full Article 

Islamic Fund

Islamic Fund

India gets new Islamic equity fund but debt market still off-limits  Full Article 

Fiscal Deficit

Fiscal Deficit

April-October fiscal deficit nears 90 pct of full-year target  Full Article 

Oil Prices

Oil Prices

Oil hits new four-year low post OPEC as glut looms  Full Article 

Gold Imports

Gold Imports

India eases gold import rule in surprise move.  Full Article 

Reuters India Mobile

Reuters India Mobile

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