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TCS net profit rises 23%, beats estimate, bullish on FY'14

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Tata Consultancy Services' net profit rises $652 million for the quarter ended December. Tata Consultancy Services' net profit rises $652 million for the quarter ended December.
SummaryIndia's No 1 software services exporter's result fuels hopes of a broad pickup in tech spending.

Country's largest software exporter TCS today posted better-than-expected 26.7 per cent jump in net profit at Rs 3,550 crore for the October-December quarter, while sounding bullish about the next fiscal and raising hopes that IT sector may have turned the corner.

Tata Consultancy Services had logged net profit of Rs 2,803 crore in the year-ago period. The numbers are according to the Indian accounting standard, Gaap.

"Fundamentally, FY'14 will be a better year than the current fiscal (2012-13). We see that the momentum is good, customers are embracing new technologies. From customers point of view, we are not seeing any cause for worry," TCS Chief Executive and Managing Director N Chandrasekaran told reporters at the company's headquarters here.

TCS, unlike its immediate peer Infosys, does not offer revenue or profit guidance as a policy.

During the October-December quarter, all the sectors and regions, barring telecom, helped the company report better growth numbers. However, the holiday season furloughs resulted in a muted revenue growth of 2.9 per cent on a sequential basis to Rs 16,070 crore, he said, adding that clients in the financial services sector have also reported the phenomenon.

"Its an unusual phenomenon...we have had furloughs, which typically used to happen in the manufacturing and hi-tech sectors. But this year we saw even financial services impacted by this," Chandrasekaran said.

Although the result was announced after market hours, TCS stock closed the day 2.14 per cent up amid upsurge in the broader market.

"The numbers are broadly in line with their expectations. But the EBIT margins came in better than expected at 27.3 per cent, which helped the company beat the overall net numbers of 3.5 per cent," Religare Capital Markets' IT and telecoms research analyst Rumit Dugar said.

The sectoral bellwether Infosys had opened the earnings season with market-beating numbers on Friday, after disappointing investors with poor earnings and guidance for more than two years. It fuelled expectations that the sector has turned the corner, with Infosys scrip rallying nearly 20 per cent.

The USD 100-billion domestic IT services sector has been under pressure due to the woes of the Western economies, as they draw over 85 per cent of their revenues from those markets.

Infosys had also raised its full-year revenue forecast after new client additions and saw an acceleration in IT spending by its existing customers, which helped the Bangalore -based company post stronger-than-expected numbers.

"Overall a steady quarter from TCS and better than expected margin

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