U.S. News

Tata Consultancy's Third-Quarter Profit Tops Forecasts

By CNBC.com

Tata Consultancy Services, India's top software services exporter, said quarterly profit rose 48%, beating expectations, as it won large outsourcing deals from foreign clients.

The company, part of India's salt-to-software conglomerate Tata group, said net profit rose to 11.16 billion rupees ($252 million) in the fiscal third-quarter ended Dec. 31 from 7.53 billion rupees in the year ago period.

That compared with a consensus net profit of 10.9 billion rupees on revenue of 47.91 billion in a Reuters poll of 10 analysts. "The numbers are quite good. At every level, the company has has beaten expectations," Tejas Doshi, head of research at Mumbai brokerage Sushil Finance,

TCS officials were upbeat about growth in the months ahead. "All the clients are ramping up so we see good growth," N. Chandrasekaran, global head of sales and operations, said. He said the company expected several new contracts. "The deal pipeline is fantastic and they are from different geographies. We have 10 deals in the pipeline," S Mahalingam, chief financial officer told reporters.

India's booming software firms have been winning large outsourcing deals from western clients, but a stronger rupee was a concern.

The rupee rose almost 4% against the U.S. dollar in October-December, slowing revenue growth in a $23 billion software and back-office services exports industry that earns nearly 60% of its business from U.S. clients.

India's number-two software exporter, Infosys Technologies, last week reported a 51.5% rise in quarterly profit and slightly raised its forecast for the full year to March as it won more business in Europe.

Mumbai-headquartered TCS said it added 55 new clients in the December quarter that included a $140 million outsourcing deal from a Latin American private bank for five years.

India's software and back-office industry, which earns 90% of its revenue from overseas clients, expects exports to rise 27-30% to $29-$31 billion in the year to end-March.