Riding on opportunities in the US and Europe and aided by a weaker rupee, Tata Consultancy Services (TCS), India’s leading software service exporter, on Tuesday posted a 34% year-on-year rise in net profit to `4,702 crore in the July-September second quarter, beating analyst expectations that were in the region of `4,400 crore.
Revenues rose 16.6% over the period to `20,977 crore. Downturn-hit clients in Europe outsourced more work to cut costs while US companies in a recovering economy spent more on technology, aiding TCS.A depreciation of about 10% in the rupee against the US dollar has boosted export-driven earnings of IT companies including TCS.
But CEO N. Chandrasekharan tempered expectations on the current third quarter. “As you know this is a quarter of furloughs. You should be having lower expectations for the quarter,” he said.
TCS’ closest rival Infosys last week reported 1.6% year-on-year growth in net profit and 31.5% growth in revenues for the second quarter. The Tata company showed more mettle in profit margins.
Analysts said TCS, which now has a profit margin of more than 30% was 6 percentage points ahead in the margin compared with Infosys, aided by more efficient use of its army of 285,000 professionals. TCS also said it would boost hiring beyond the 45,000 it planned earlier for 2013-14.
The company won eight large deals in the latest quarter and increased the number of $100-million-plus clients to 22 from 19.
“The company has been able to effectively identify opportunities in a volatile macro environment,” said Dipen Shah, head of private client group research, Kotak Securities.