Net income rose 8.7% to 113.4 billion rupees in the quarter through September. Analysts, on average, had projected a profit of 114.09 billion rupees. Sales climbed 7.9% to 596.9 billion rupees. Shares of TCS declined 1.7% in early Mumbai trading.
TCS leads India’s $245 billion-plus IT services industry, which is bracing for a slowdown as enterprises in the US and beyond cut back on technology to cope with high interest rates and inflation. Russia’s continued war on Ukraine has also created economic uncertainty for businesses. Like homegrown rival Infosys Ltd., TCS is also trying to fuel growth through higher-margin digital services.
“The demand environment is under pressure in the US market,” Chief Operating Officer N Ganapathy Subramaniam said in an interview on Bloomberg TV. “In this quarter, we’ve signed about $4 billion worth of deals in North America, which is a tad low.” Customers are starting projects that will deliver visible results within one or two quarters, while postponing longer ones, Subramaniam said.Pressure on Tata Consultancy Services’ sales growth is likely to stay muted in 2H, as companies keep cutting discretionary IT spending, despite a ramp-up in new contract activity. Though the book-to-bill ratio improved to 1.6x vs. 1.4x in the past two quarters, we’re not projecting a recovery in sales growth in the near term.
The company has aligned itself along seven business groups that cover sectors from banking, financial and insurance industries to health care, energy and retail.