TCS Q2 Profit Up 14.7%

17 Oct, 2011

India's top software exporter Tata Consultancy Services (TCS) reported a 14.7-per cent rise in quarterly net profit, marginally below estimates, and warned of uncertainty in the global economy.

India's showpiece $76 billion industry gets more than 90 per cent of its revenue from providing technology services to overseas clients and counts the United States and Europe as its biggest markets.

Europe is the second largest market for the software firms, and the euro zone debt crisis is a worry for the sector that has been looking to increase its sales to the region to hedge against their excessive exposure to the United States.

TCS Chief Executive Officer N. Chandrasekaran there were "ambiguities in the external environment in the short-term" but the company had not yet seen any project cancellation or cutback in client spending on technology.

TCS and its local rivals have also been facing stiff competition from global players including IBM and Accenture for large outsourcing deals from global corporations.

TCS, a unit of the salt-to-steel conglomerate Tata Group, said on Monday its fiscal second quarter net profit rose to Rs 24.39 billion ($498 million) in accordance with international financial reporting standards, from Rs 21.26 billion reported a year ago.

Revenue rose by about a quarter to Rs 116.34 billion.

This compares with a Reuters poll forecast of Rs 24.77 billion in profit and revenue of Rs 117.05 billion for the company, whose major clients include Citigroup, General Electric, British Airways and Sony Corp.

TCS added 35 new clients in the fiscal second quarter that ended on Sept. 30 and its chief executive said the company was chasing 10 large deals currently.

Shares in TCS, valued at about $45 billion, closed down 1.2 per cent at Rs 1,120.25 ahead of the result announcement in a Mumbai market that closed 0.27 per cent down.

Infosys, India's No.2 software services exporter, last week reported a 9.7-per cent rise in second quarter profit, roughly in line with street estimates, easing investor worries of a sharp slowdown in the outsourcing sector.

Third-ranked Wipro is expected to report a 0.7 per cent drop in its quarterly net profit on Oct. 31.