TCS-huge margin to post a surprise growth in revenues

MUMBAI: Tata Consultancy Services (TCS) overcame a tough business environment and beat street expectations by a huge margin to post a surprise growth in revenues and net profit for the first quarter of the fiscal, but warned that it was too early to wish away the global recession and demand uncertainty.

India’s largest software exporter posted a 23% growth in net profit at Rs 1,520 crore, helped by lower costs and higher revenues from major markets, but said pricing will remain under pressure in the next one year. Revenues were up 12.4% to Rs 7,207 crore, as the US market showed signs of stability as did the troubled financial services sector. “It is a stellar quarter, made strong by operational execution. The global economy continues to be weak and job losses are happening all over. We are watchful of the situation and do not rule out more surprises,” said TCS managing director and chief executive S Ramadorai, reflecting the mixed trend.
The company said it would pay the variable component of employee salaries in full for the quarter, but would continue with the freeze on wage hikes for now. The company has performed better than its closest rival Infosys Technologies with a business volume growth of 3.6% during the quarter, compared with a 1.1% volume decline announced by Infosys. Pricing pressure, however, continues and the company said there was a 25 basis points decline in pricing during the quarter. “Pricing will not go up. We will be lucky if we maintain it,” said chief operating officer and CEO-designate N Chandrasekaran.



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