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

economictimes.indiatimes.com:

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.