TCS net profit misses estimates amid weak services demand
Net income rises to Rs5,440 crore in the third quarter from Rs5,310 crore reported a year earlier
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New Delhi: Tata Consultancy Services Ltd., India’s largest software services company, posted profit that trailed analyst estimates as clients especially in the insurance industry held back on outsourcing work.
Net income rose to Rs5,440 crore ($876 million) in the third quarter from Rs5,310 crore reported a year earlier, the Mumbai-based company said on Thursday. That compares with the Rs5,480 crore median of 37 analysts’ estimates compiled by Bloomberg.
Earnings at Tata Consultancy missed estimates for the second consecutive quarter as currency volatility combined with seasonal shutdowns at clients and holidays to damp revenue. Chief financial officer Rajesh Gopinathan last month said “a weak demand environment” especially in India made it difficult to project an outlook for the company’s fourth quarter.
“We expect revenue to be impacted by both seasonality as well as cross currency,” Sagar Lele, an analyst at Antique Stock Broking Ltd. in Mumbai, said before the earnings announcement. “We’re not expecting a big number on the revenue front, but what we’ll be keenly watching would be the management commentary around the demand environment.”
Sales rose to Rs24500 crore and compared with the Rs24520 crore median of analysts’ estimates.
Shares of Tata Consultancy rose 0.7% to Rs2,539.10 at the close in Mumbai trading, before the announcement. The benchmark S&P BSE Sensex Index climbed 2.7 percent.
Smaller rival Infosys on 9 January posted third-quarter profit that beat analyst estimates as it won more clients. The Bengaluru-based company maintained its forecast for full-year sales to rise 7% to 9% in US dollar terms. Bloomberg