Reuters logo
8 days ago
UPDATE 2-India's Tata Consultancy upbeat on client spending after Q1 profit dip
July 13, 2017 / 11:50 AM / 8 days ago

UPDATE 2-India's Tata Consultancy upbeat on client spending after Q1 profit dip

3 Min Read

* Q1 net profit falls 6 pct, stronger rupee hits revenue

* CEO sees strong pipeline from N.America, smaller customers

* India's software industry facing U.S. visa challenge (Adds CEO comments)

By Sankalp Phartiyal and Tanvi Mehta

MUMBAI/BENGALURU, July 13 (Reuters) - Top Indian software services exporter Tata Consultancy Services (TCS) said on Thursday it was optimistic about client spending on technology even as a cautious global environment and a stronger rupee dented first-quarter profit.

TCS, part of the salt-to-software Tata Sons conglomerate, reported consolidated net profit for the three months to June 30 fell nearly 6 percent from a year earlier to 59.5 billion rupees ($923.2 million).

Analysts on average had expected 61.81 billion rupees.

India's more than $150 billion software services sector is facing headwinds in its biggest market, the United States, as clients hold back technology spending due to uncertainty over President Donald Trump's order for a review of a visa program for skilled workers.

Indian IT firms use the H-1B visa program to fly in engineers and developers to service U.S. clients.

Adding to the sector's woes, the Indian rupee has appreciated about 5 percent this year against the U.S. dollar, making exports costlier.

TCS was seeing a "strong pipeline" for new deals in the key North American market, especially from smaller customers, Chief Executive Rajesh Gopinathan told a news conference.

In the banking, services and insurance segment, the company was seeing strong demand from the "bottom of the pyramid" as new entrants are coming into the sector, he said.

"From an overall demand perspective looking forward we see a combination of strong demand for smaller projects coming out of newer areas like digital and some amount of very large transformation deals, especially in the insurance space," said Gopinathan, who took the top job in February.

Chief Financial Officer V. Ramakrishnan said in a statement that the rupee's appreciation against the dollar meant a loss of 6.50 billion rupees in reported revenue.

Revenue for the quarter rose 1 percent from a year earlier to 295.84 billion rupees.

Brokerage Kotak described the TCS first-quarter numbers as weak, adding it expected further cuts to its own and consensus earnings-per-share estimates of the company. The brokerage said in a client note it maintained its "reduce" rating on the stock.

TCS added one client with annual billing of $100 million-plus and one with billing of more than $50 million in the June quarter, TCS said.

It hired a gross 11,202 employees in the quarter. The company has said it will increase hiring in the United States and does not plan to cut its investment there.

Infosys Ltd, the second-biggest Indian software services exporter, is due to report quarterly results on Friday.

$1 = 64.4400 Indian rupees Reporting by Sankalp Phartiyal in Mumbai and Tanvi Mehta in Bengaluru; Writing by Devidutta Tripathy; Editing by Mark Potter and Edmund Blair

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below