TCS had reported sales of Rs 13,259.3 crore and net profit at Rs 2,932.4 crore in the March quarter. In terms of US dollar, revenue jumped 3 per cent at $2728 million against $2648 million.
The strong earnings will boost investor morale, which has been battered by the recent underperformance in Infosys, once India’s IT bellwether. Infosys cut its full year sales forecast to a dismal 5 per cent today, which led to sharp fall in IT stocks. Infosys saw the biggest fall in three months and ended 8 per cent lower on the BSE.
"It is a relief to see these numbers. The worries on our mind have been if the slowdown is across the industry. The verdict is clear that the slowdown is Infosys specific. The results are slightly ahead of our expectations," Prakash Diwan said.
Unlike Infosys, TCS does not offer quarterly guidance for future earnings. But the company has said in the past that it is confident of beating the upper end of the 11-14 per cent annual growth estimate put out by industry body National Association of Software Companies, or Nasscom. Incidentally, TCS chief executive and managing director N. Chandrasekaran is also the chairman of Nasscom.
Operating profit margin, a key measure of profitability, rose to 27.5 per cent against expectations of 29.4 per cent and was singled out as a key disappointment by analysts. Net profit margins stood at 22.1 per cent.
"The margins have not improved despite the fall in the rupee and that is a disappointment," AK Prabhakar, senior vice president (equity research) at Anand Rathi said.
TCS and Infosys are mainstays of India's $100 billion-a-year information technology and back-office services sector that earns about three-quarters of its revenue from exports to the United States and Europe. Ahead of TCS' results, shares in the company, a unit of India's diversified Tata Group conglomerate, ended 1.8 per cent lower compared to a 1.3 per cent drop in the Mumbai market.
The company added 29 new clients in the June quarter.
(With inputs from Thompson Reuters)