Tata Consultancy Services warns of weaker fourth-quarter earnings

Mar 19 2014, 19:43 IST
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Weakness in India continues and is Weakness in India continues and is "likely to de-grow again, Tata Consultancy Services said. REuters
SummaryWeakness in India continues and is "likely to de-grow again, Tata Consultancy Services said.

After Infosys, the country's largest software services firm * Tata Consultancy Services has warned of weaker earnings for the January-March quarter.

TCS, in a management commentary, said the fourth quarter of the financial year is expected to be weaker than October-December and is typically so for IT services firms on account of furloughs.

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The fourth quarter is seasonally weaker than the third, it said. Europe is growing well, while the US and the UK are growing at "company average," TCS said. Weakness in India continues and is "likely to de-grow again," it said.

TCS posted a 50.3 per cent increase in consolidated net profit at Rs 5,333 crore in the October-December quarter, while revenue rose 32.5 per cent to Rs 21,294 crore.

Last week, India's second-largest IT services exporter Infosys expressed caution on the business environment and warned that its near-term performance could be choppy.

"At a broad level, we are seeing slowdown with unanticipated rampdowns and some cancellation of our projects," Infosys CEO SD Shibulal had said.

The company hinted that its full-year sales may be "near the lower end" of its guidance, sending Infosys shares down about 9 per cent.

TCS, however, is confident that 2014-15 would be better than the ongoing financial year, driven by an uptick in discretionary spending.

Verticals such as media and life sciences are showing good growth whereas BFSI, retail, manufacturing, telecom and hi-tech are growing on par, it said.

TCS expects minimal impact of currency, with no difference between constant currency revenue and revenue in dollar terms.

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There could be a "10-20 basis points difference between constant currency revenue and INR revenue," it said, adding that other income is likely to be flattish quarter-on-quarter.

Shares of TCS fell 3.84 per cent to close at Rs 2,040.95 on the BSE Sensex.

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