Tata Consultancy Services Ltd (TCS) will beat market expectations when it announces its financial results for the fourth quarter and the full year of 2006-07 on Thursday, said analysts.
“A larger global footprint and its revamp of front-end sales is going to keep TCS perform better than industry average,” said Sudin Apte, head, India, Forrester Research Inc., an IT consulting firm.
The results come in the wake of fears that a slowdown in the US economy and a weak dollar (compared to the rupee) could hurt Indian IT companies that predominantly serve customers in the US and Europe.
TCS is India’s largest software services firm and an above-expectations performance from it could further boost the confidence of investors who returned to the market in numbers on Friday, even as the first corporate results started trickling in.
A report by brokerage Religare Securities said the company would register revenue of Rs5,180 crore for the January-March quarter, up 39.2% over the corresponding number a year ago. The firm also said TCS would record a net profit of Rs1,200 crore for the quarter, up 51% from a year ago.
If these numbers pan out, TCS will end 2006-07 with Rs18,832 crore in revenue and Rs4,217 crore in net profit. The company ended 2005-06 with Rs13,386 crore in revenue and Rs2,967 crore in net profit.
Reacting to the strengthening rupee in late March, TCS chief financial officer S. Mahalingam?had?said:?“The impact on margins is diluted to some extent because we will have dollar expenses too and the impact on margins will depend on the percentage of dollar expenses, as well as on timing of payment.”
He had added that the company “entered Q4 with a hedge of $589 million (Rs2,533 crore) which could be realized at around Rs45. In our opinion, this will off-set some of theimpact of the rupee appre-ciation.”
Last week, while announcing its results for the fourth quarter and the full year of 2006-07, TCS’ rival Infosys Technologies Ltd had issued a 22.6-24.6% revenue guidance for 2007-08. On Saturday, CMC Ltd, a subsidiary of TCS reported a 109% growth in net profit to 20.82 crore for the January-March quarter of 2007 as compared to a year ago. The company ended the year with a revenue of Rs 1085 crore and a net profit of Rs 69 crore.