MUMBAI, Oct 11, 2019 (BSS/AFP) – India’s largest software exporter Tata
Consultancy Services (TCS) on Thursday reported weak quarterly earnings,
missing profit estimates as demand for its key banking and financial sector
services shrank.
The Mumbai-headquartered firm posted a 1.8 percent rise in consolidated
net profit to 80.41 billion rupees ($1.13 billion) for the quarter ended
September, up from 79.01 billion a year earlier, the company said.
The downbeat figures come as India’s economy endures a prolonged slowdown
— with the software giant’s revenues seen as an indicator of the health of
the country’s IT export sector.
“We ended the quarter with steady growth despite increased volatility in
the financial services and retail verticals,” TCS chief executive Rajesh
Gopinathan said in a statement.
“We remain confident as the medium and longer term demand for our services
continues to be very strong, as evidenced by our Q2 order book — the highest
in the last six quarters.”
Known as India’s second-most valuable company, TCS was at the forefront of
an IT boom that saw the country become a back office to the world as firms —
largely in developed nations — subcontracted work, taking advantage of a
skilled English-speaking workforce.
TCS earns more than 80 percent of its revenues from Western markets
including Britain, the United States and Europe.
The September-ended quarter is generally considered a strong one for
India’s IT service exporters due to increased spending from clients in
Western markets.
But US-China trade tensions have sparked fears for the global economy,
with the International Monetary Fund forecasting the weakest growth in a
decade.
India, Asia’s third-largest economy, saw growth fall to five percent in
the June quarter, according to official data as manufacturing activity and
consumer demand cooled.
Many financial agencies have revised India’s growth projections for the
2019-20 financial year, with some warning that a stronger dollar would cause
the rupee to fall throughout 2019, stoking inflation and eroding demand
further.
On Thursday, ratings agency Moody’s revised the country’s GDP growth
forecast to 5.8 percent from a previous estimate of 6.2 percent for the
financial year 2019-20, lower than the 6.1 percent projected by the Reserve
Bank of India.
TCS shares were down 0.80 percent in Mumbai after the earnings
announcement.
The company’s rival Infosys is expected to announce its quarterly results
on Friday.