TCS Q3 cons net up 23 pc on outsourcing demand

New Delhi: Tata Consultancy Services reported 23 per cent year-on-year rise in second quarter consolidated net profit at Rs 2,887 crore, helped by continued demand for outsourcing services and said the deal pipeline remains strong.

Revenue for October-December quarter jumped 37 per cent from a year ago to Rs 13,204 crore, India's top software services exporter said on Tuesday

Analysts on average had expected TCS net profit at Rs 2,893 crore on revenue of Rs 13,230 crore, according to CNBC-TV18 poll.

"While technology budgets are still being set for the next fiscal (year), there is little doubt that technology is a key resource to help global businesses optimise their operations and fuel growth in the current economic climate," said N Chandrasekaran, CEO and MD.

TCS' operating margin in the third quarter was up 218 basis points at 29.2 per cent.

"We continue to focus on managing our operations optimally in the face of increased external volatility. We have increased operating margins significantly by taking the benefits of growth, exchange movements and by keeping a strong focus on cost management," said S Mahalingam, CFO.

While the rupee depreciation aided margin expansion, net earnings were hurt due to foreign exchange losses.

TCS said it had a forex loss of Rs 300.81 crore in the third quarter, versus a gain of Rs 52.16 crore in the year ago quarter.

"The level of currency and market volatility has only risen in the past three months and we are adapting our strategies accordingly," said CFO S Mahalingam.

The global economic uncertainties led by the euro zone debt crisis is a major worry for Indian software service providers. TCS, however, said it saw growth across regions, with Europe "leading the growth story among mature markets."

The company said Europe business grew 18.1 per cent, followed by US at 13.3 per cent and UK grew by 9.5 per cent, in the third quarter. Latin America revenue grew 18.6 per cent, APAC (Asia-Pacific) region saw a 15.7 per cent growth, while revenues from India, were up 14.8 per cent, it said.

"All industry sectors have shown strong growth with all sectors growing at more than double digits except telecom," TCS said.

TCS added 40 new clients in the third quarter and signed 10 large deals during the quarter. The number of $ 100 million clients rose to 14 from 12, it said.