October 11, 2018 / 11:36 AM / 6 days ago

TCS forecasts double-digit revenue growth after record profit

MUMBAI (Reuters) - India’s top software services exporter Tata Consultancy Services Ltd (TCS) has forecast double-digit revenue growth in this fiscal year, driven by strong demand for digital services and healthy spending by key clients.

FILE PHOTO: Logos of Tata Consultancy Services (TCS) are displayed at the venue of the annual general meeting of the software services provider in Mumbai, June 29, 2012. REUTERS/Vivek Prakash/File Photo

TCS Chief Executive Rajesh Gopinathan’s decision to give a forecast on Thursday was a rare move for the Mumbai-headquartered company which, unlike rivals Infosys and Wipro, does not typically give revenue guidance.

“In a one-time departure from our typical stand, I want to share that we now have numbers on the board and the momentum to ensure double-digit trajectory continues for the rest of the year,” Gopinathan told reporters at a news conference.

TCS ended the fiscal year to March with year-on-year revenue growth of 9.3 percent in constant currency terms. Its forecast would mean TCS expects to beat the 7-9 percent growth estimates for the industry as a whole in the year to March 2019.

On Thursday, the company posted record net profit of 79.01 billion rupees ($1.07 billion) in the quarter to end September, up from 64.46 billion rupees a year earlier.

That was helped by revenues from retail sector and banking, financial services and insurance (BFSI) clients.

The number was in line with analysts’ expectations for consolidated net profit of 79.02 billion rupees, according to Refinitiv Eikon data.

Revenue from BFSI clients rose 19.8 percent to 146.48 billion rupees, while the overall income from operations grew by just over a fifth to 368.54 billion rupees.

“BFSI is very broad-based,” Gopinathan said. “We are seeing growth across all regions - Europe, the UK, the U.S., across the board.”

The Indian rupee, which has weakened by more than 14 percent since the start of January on the back of an emerging market rout and domestic economic concerns, helped TCS achieve dollar revenues of $5.22 billion in the quarter.

A depreciating rupee boosts the earnings of exporters who bill most of their clients in dollars.

However, uncertainties created by Britain’s upcoming departure from the European Union and a tariff war between the U.S. and China could affect client budgets, Gopinathan said.

Shares in TCS ended down 3.1 percent ahead of the results. The broader Mumbai market closed 2.2 percent lower after a sharp-sell off in Wall Street triggered a surge of global selling.

($1 = 74.0400 Indian rupees)

Reporting by Promit Mukherjee and Sankalp Phartiyal; Additional reporting by Krishna V Kurup; editing by Jason Neely, Elaine Hardcastle and Jan Harvey

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