TCS September quarter profit up 13.2% at Rs5,244 crore, lags estimates - Livemint

The company’s operating profit at Rs.6,351 crore saw a 7% rise over the preceding quarter, and its operating margin stood at 26.7%. Photo: Mint

Mumbai: For the first time in 12 quarters, India’s largest software services provider Tata Consultancy Services Ltd (TCS) reported a sequential drop in its rupee net profit.

The company also reported lower-than-expected growth in its fiscal second-quarter profit revenue over the year-ago period as customers shied away from spending on large outsourcing deals.

The company’s rupee net profit rose to Rs.5,244 crore in the three months ended 30 September, up 13.2% from Rs.4,633 crore in the year earlier, but down 5.8% over the preceding quarter’s net profit of Rs.5,568 crore.

A median of 44 analysts’ estimates, compiled by Bloomberg, had pegged net profit at Rs.5,388.2 crore for the September quarter.

Revenue rose 13.5% to Rs.23,816 crore from Rs.20,977 crore. The market had expected revenue at Rs.23,993 crore, according to estimates of 46 analysts compiled by Bloomberg.

TCS, which had performed the best among all Indian information technology (IT) services providers, for over a year, had last posted a 4.7% sequential drop in net profit in the 2011 September quarter.

September quarter revenue grew 7.7% over the preceding quarter’s figure at Rs.22,111 crore.

TCS, which saw “strong organic volume growth at 6.1%”, said it added four over-$50 million clients and nine over-$20 million clients in the second quarter.

The company’s operating profit at Rs.6,351 crore saw a 7% rise over the preceding quarter, and its operating margin stood at 26.7%.

N. Chandrasekaran , chief executive officer and managing director of TCS, attributed the profit growth in the September quarter to “strong volumes and robust utilisation rates...and broad-based growth in our key markets, industries and services”.

He added that with his company using “digital technologies to re-imagine their (clients’) business..., we remain well positioned to act as a catalyst and enable their business innovation across the enterprise.”

Last Friday, Infosys Ltd , India’s second-largest software services exporter, beat analyst estimates to report strong numbers in the September quarter, even as it maintained its annual revenue forecast of 7-9%, citing currency volatility.

The company had reported a 28.6% rise in net profit to Rs.3,096 crore, while its revenue rose 2.9% to Rs.13,342 crore, and dollar revenue rose 6.5% to $2.2 billion, as compared to the year ago period.

TCS’s total headcount as on 30 September stood at 313,757. It crossed the milestone of employing 100,000 women professionals.

TCS said emerging markets continued to be volatile with India growing but Latin America faltering in the second quarter. “There was balanced growth across IT and other service lines led by infrastructure services and engineering services,” the company said in a statement.

While TCS does not provide earnings forecasts, the management spoke of a positive outlook on discretionary spends and deals.

The company added it did not foresee any growth decline in the December quarter.

In the June quarter, TCS—which counts Citigroup Inc. , BP Plc. and AstraZeneca Plc. among its customers -- had said that it expects demand for its services across its major markets to remain strong in the year to 31 March.

The results were declared after market hours.

TCS shares fell 0.8% to close at Rs.2,678.85. The benchmark Sensex closed 1.3% down at 25,999.34 points while the BSE IT Index fell 1.6% to close at 10,553.41 points.

Bloomberg contributed to the story.