TCS posts 22% increase in net profit, management says will beat Nasscom estimates

TCS posts 22% increase in net profit, management says will beat Nasscom estimates
Tata Consultancy Services reported a fourth quarter net profit of Rs 3,597 crore, in line with expectations. Sales came in at Rs 16,430 crore, marginally above estimates.

In year on year terms, net profit rose 22 per cent from Rs 2,946 crore in the year-ago period.

Brokers polled by NDTV expected Q4 sales at Rs. 16,403 crore, a 2 per cent rise over Rs. 16,069 crore in the December quarter. Net profit was estimated to fall 0.3 per cent sequentially to Rs. 3,540 crore against Rs. 3,551 crore in the December quarter.

Dollar revenue came in at $3,040 million and EBIT margins stood at 26.5 per cent.

TCS, India's biggest IT outsourcer, has increasingly come to be regarded as the bellwether of the over $100 billion tech industry after Infosys missed its sales outlook for the second year in a row disappointing the Street.

TCS does not give out an annual sales outlook, but the management said the company will grow faster than industry body Nasscom's 12-14 per cent projection for fiscal 2013-14.

N. Chandrasekaran, the managing director and chief executive officer of TCS, said, "All the markets delivered growth. We added 153 new clients and hired more than 69,000 employees in the last financial year. The retrenchment levels are very high."

TCS plans to hire 45,000 employees in the current financial year, human resources head Ajoy Mukherjee said.

The company added 52 new clients in the fourth quarter. The March quarter is seasonally weak as clients freeze and allocate annual budgets.

"Our deal pipeline is strong. The telecom sector will see a recovery in the coming quarters," Mr Chandrasekaran added.

Rajesh Gopinathan, chief financial officer of TCS, said: "Our growth has been well-rounded in 2012-13 and we have endeavored to maintain our profitability despite stiff headwinds and increased volatility through the year. We continue to ensure cost discipline at an operational level while supporting diversified business growth."

On Wednesday, the TCS stock closed 1.73 per cent lower at Rs 1,459.20 on the Bombay Stock Exchange while the benchmark 30-share Sensex closed 0.7 per cent down. TCS shares have outperformed the broader BSE IT index over the last month, falling 5.5 per cent against a 13 per cent fall in the IT benchmark.

IT stocks have come under huge pressure since Infosys last week reported conservative growth estimates of 6 to 10 per cent in fiscal 2013-14 as compared to estimates of 9 to 13 per cent. India's second largest IT outsourcer cited a challenging global economy for the muted forecast, which effectively eclipsed marginally better profits that the company reported for the fourth quarter ending March 2013.

Earlier today, HCL Technologies, India's fourth largest service provider reported a robust 73 per cent year-on-year jump in net profit at Rs 1,040 crore and a 23.2 per cent increase in revenue at Rs 6,425 crore for the third quarter. On a quarterly basis, net profit rose 7.8 per cent while revenue grew 2.4 per cent.

India's IT services sector has been under pressure to sustain growth as clients in key markets, including the United States and Europe, maintain a cautious stance on tech spending due to an uncertain global economy.


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