India's TCS tops revenue estimates on weak rupee, banking boost
- Consolidated sales for TCS rose 14% year-over-year to 722.75 billion rupees in the three months ended June
BENGALURU: India’s top software services exporter Tata Consultancy Services beat quarterly revenue estimates on Thursday, helped by higher spending by banking clients and a weak rupee.
TCS, the first major Indian IT company to report first-quarter results, is seen as the bellwether for India’s $315 billion IT sector. Analysts have lowered earnings estimates for the sector as clients have tightened non-essential tech spending and on worries that advanced AI tools would disrupt traditional business models of software firms.
India’s Nifty IT constituents have lost $100 billion in market capitalisation since February.
Consolidated sales for TCS rose 14% year-over-year to 722.75 billion rupees ($7.58 billion) in the three months ended June, beating analysts’ average estimate of 720.30 billion rupees, according to data compiled by LSEG.
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The IT firm’s order book shrank to $9.5 billion from $12 billion in the previous quarter despite deals with European manufacturing giant SKF, insurer Canada Life and Norwegian packaging firm Elopak.
Two mega deals wins in the banking, financial services and insurance sector last fiscal boosted revenue, with sales from the key business vertical rising 2.4%.
Despite wider concerns about job losses from increasing adoption of AI tools, TCS added around 9,300 employees in the quarter, its highest in more than three years.
“This is a marginally better performance from TCS in terms of deal wins, revenue than what we expected and they have also restarted hiring,” said Anshul Jethi, analyst at LKP Securities.
“But we need to wait and watch if this is a turnaround or one-off case amid the geopolitical rollercoaster still hurting sentiments.”
TCS, which provides AI services to its clients, said its annualised AI revenue crossed $2.6 billion, driven by faster deployments across industries, rising from $2.3 billion in the previous quarter.
The company’s net profit rose 4.6% to 133.49 billion rupees despite a one-time charge involving a settlement of an IP-theft case involving DXC Technology.
A weaker rupee boosted revenue of IT firms that bill clients in foreign currencies and incur most costs in rupees.
TCS’ Mumbai-listed shares closed 0.4% lower ahead of the results.