Tata Consultancy Q1 net profit up 28%

Tata Consultancy Q1 net profit up 28%

Mumbai: Tata Consultancy Services (TCS) , India’s largest software services exporter, posted a better-than-expected rise in quarterly profit driven by increased spending by clients, and said the uncertain global economy was unlikely to hurt demand.

The global information technology market will grow 7.1% this year, up from a previous projection of 5.6%, according to Gartner, which bodes well for top Indian exporters like TCS and Infosys.

Still, India’s No.2 software services exporter Infosys Ltd warned on Tuesday it faces a volatile global economy that could slow client spending, and posted its slowest pace of quarterly customer acquisition in at least four years.

“We remain watchful but do not expect the current macro issues to impede business decision-making in those markets," TCS chief financial officer S. Mahalingam said in a statement.

TCS, a unit of the salt-to-steel conglomerate Tata Group, said on Thursday it posted a 28% rise in quarterly net profit.

The firm said first-quarter net profit rose to 2,380 crore ($535 million) while revenue rose 31% to 10,800 crore based on international financial reporting standards, as it added 24 new clients in the quarter ended June.

Profit margins in the June quarter dropped 64 basis points, mainly due to wage hikes.

The company, whose major clients include Citigroup , General Electric , British Airways and Sony Corp , reported its results under IFRS rules for the first time, moving away from US accounting standards.

Analysts, on average, had expected net profit of 2,288 crore and revenue of 10,691 crore under US accounting standards for TCS, a Reuters poll showed.

Shares in TCS, valued at about $50 billion, closed down 2.2% at 1,123.70 ahead of the earnings announcement, in a positive Mumbai market.

Close