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    TCS Q1 profit rises 17% YoY but outlook 'soft'

    Synopsis

    "There is near-term softness because of uncertainty," said K Krithivasan at his first earnings call as managing director and chief executive of TCS. "Some of the low-return on investment (RoI) and non-critical investments are getting paused, deferred or re-prioritised."

    tcs-99773212Agencies
    "Naturally, as an organisation, we always improve our processes. But sufficient to say, we are working on this," said chief operating officer N Ganapathy Subramaniam.
    Mumbai|Chennai: Net profit for the June quarter at Tata Consultancy Services (TCS) advanced 17% on-year, beating D-Street estimates, but India's software bellwether warned it lacks immediate visibility on a rebound in demand that remains "soft and uncertain," with clients across geographies and business verticals deploying elaborate priority filters to assess the necessity of spending money now on discretionary and non-critical projects.

    The most-valued Tata group company on Wednesday said net profit climbed to ₹11,074 crore, from ₹9,478 crore a year ago, paced by better cost realisation. Sequentially, however, net profit declined about 3%. An ET poll of analysts had pencilled in on-year net profit around ₹10,931 crore, on revenue of ₹59,619 crore. Revenue climbed about 13% on-year to ₹59,381 crore but trailed estimates due to increasing delays in project execution.

    Upbeat on Longer-term Deal Pipeline
    "There is near-term softness because of uncertainty," said K Krithivasan at his first earnings call as managing director and chief executive of TCS. "Some of the low-return on investment (RoI) and non-critical investments are getting paused, deferred or re-prioritised."

    For the moment, projects were facing delays, although there was no large-scale rampdown or cancellation, he said. The company had recently reported an early end to the $2-billion Transamerica project.

    "Revenue is not strong because of some of the programmes getting paused or delayed, or in some cases, the capacity is reduced," said the CEO. There is no visibility yet on the start to the cycle of demand recovery, said Krithivasan, adding that clients are also reassessing their technology spends in many cases, after a cycle of increased expenditures.
    TCS Q1 Profit Rises 17% YoY but Outlook ‘Soft’

    Interim Dividend
    The Mumbai-based company, which makes up nearly half of the Tata group's Rs 23-lakh crore market capitalisation, declared an interim dividend of Rs 9 per equity share. Separately, Krithivasan didn't comment on the recruitment scandal that affected the resource management group (RMG) of TCS, saying there was "nothing more to add."

    Addressing the recent annual general meeting, TCS chairman N Chandrasekaran had said the company had sacked six employees and blacklisted six staffing firms based on two whistleblower complaints it received on discrepancies in the recruitment process. Three more employees were under investigation.

    "Naturally, as an organisation, we always improve our processes. But sufficient to say, we are working on this," said chief operating officer N Ganapathy Subramaniam.




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    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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