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TCS beats Street, net up 20 per cent

However, strong rupee, shaky US economy remain concern areas, reports Suprotip Ghosh .

business Updated: Jan 17, 2008 02:52 IST
Suprotip Ghosh
Suprotip Ghosh
Hindustan Times

India’s top software services exporter, Tata Consultancy Services Ltd, on Wednesday beat forecasts with a 20.5 per cent rise in quarterly profit as it won new outsourcing deals and raised fees for clients.

The company, part of the Tata group that has interests in cars, commodities and services, said net profit rose to $339 million in the fiscal third quarter ended December 31, from $276.25 million a year earlier, under the US accounting standards.

Tata Consultancy’s leading clients include General Electric, ABN AMRO and Nielsen Co.

Last week, rival Infosys Technologies Ltd beat expectations with a 25 per cent rise in quarterly profit and raised its full-year forecast despite uncertainty over the economic health of its key US market.

Competent English-speaking staff and lower wages have helped India's services firms grab outsourcing jobs. But a strong rupee, rising pay and the shaky US economy are big worries.

Ahead of the results, shares in Tata Consultancy closed up 0.7 per cent at Rs 944.50 on the Bombay Stock Exchange that fell nearly 2 per cent. The stock had climbed 2.5 per cent in the December quarter, underperforming a 17 per cent gain in the main index. However, it fared better than its biggest domestic rivalsInfosys Technologies Ltd, the country’s second-largest computer-services provider, which was the worst performer in the Sensex, with a 21 perce nt decline. Wipro Ltd., ranked third, fell 13 per cent.

Commenting on the company’s performance, Chief Executive Officer and Managing Director S Ramadarai said, “Our diversified business model continues to sustain the growth momentum despite external challenges. There is growth momentum across geographies with contribution from all business units.”

“The long-term prospect is good because the kind of brand equity TCS has built, specifically in US markets, is pretty strong,” said Atul Penkar, who helps manage about $3 billion at Birla Sunlife Asset Management Co. “That is backed with very good delivery and execution capabilities. It's a very stabilised business model and the kind of client relationships that they have is also pretty good,” he added.