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UPDATE 1-India's TCS posts higher profit, confident of demand growth
April 18, 2017 / 1:58 PM / 7 months ago

UPDATE 1-India's TCS posts higher profit, confident of demand growth

(Adds details on results, company comments)

By Sankalp Phartiyal

MUMBAI, April 18 (Reuters) - Tata Consultancy Services Ltd , India’s biggest software services exporter, reported a slightly smaller than expected rise in fourth-quarter earnings on Tuesday, but was confident of demand growth in some of its major focus areas.

TCS, part of the Tata Group - India’s largest conglomerate, expects a robust pipeline of projects in automation and cloud services, its chief operating officer N. Ganapathy Subramaniam told a news conference following the earnings release.

The results come as India’s more than $150 billion software services sector faces uncertainties over visa rules in its biggest market, the United States.

U.S. President Donald Trump is expected to sign an executive order on Tuesday directing federal agencies to recommend changes to the H-1B visa program.

Any change in the temporary visa program for skilled workers could increase costs for companies such as TCS. The visa program is used by Indian software service companies to fly engineers and developers to the United States temporarily to service clients there.

“We are competitive and as long as the regimes are broadly equal for everyone we don’t see our relative competitiveness actually going down,” TCS Chief Executive Rajesh Gopinathan, who took over the top job in February, told the news conference.

QUARTERLY RESULTS

TCS’s consolidated net profit rose 4.2 percent to 66.08 billion rupees ($1.02 billion) in the three months to March 31, from 63.40 billion rupees in the year-ago period.

Analysts had, on average, expected a consolidated profit of 66.62 billion rupees, according to Thomson Reuters data.

TCS, which reported its first quarterly earnings under new CEO Gopinathan, said revenue rose 4.2 percent year-on-year to 296.42 billion rupees.

“TCS’s weak revenue performance in U.S. and financial services on the back of Infosys commentary will certainly dent confidence on pick up in spending in the financial services space in fiscal 2018,” said brokerage firm Emkay in a note to clients, referring to the year ending in March 2018.

Infosys, the No. 2 Indian player in the sector, reported quarterly results last week. It forecast revenue growth of 6.5-8.5 percent in constant currency terms this fiscal year, a guidance some analysts saw as disappointing.

For the full year to end-March, TCS said its digital revenue including from cloud, automation, analytics and internet of things (IoT) grew 29 percent. The company said in a statement it saw “double digit” percentage growth in all its business sectors except banking and financial services, retail and hi-tech.

$1 = 64.6250 Indian rupees Reporting by Sankalp Phartiyal; Writing by Promit Mukherjee; Editing by David Evans and Mark Potter

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