Monday April 21, 08:50 PM
Tata Consultancy's Q4 net below forcast; sees growth |
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By Rina Chandran
MUMBAI (Reuters) - Tata Consultancy Services Ltd posted a lower-than-expected rise in quarterly profit on Monday, but sounded positive on growth prospects despite worries that a weak U.S. economy would hurt outsourcing deals.
India's top software exporter, which got half its revenue from the United States in the March quarter, said it would boost growth in new markets like Asia-Pacific, India, the Middle East and Latin America as part of its strategy to diversify revenue.
"We are confident of our growth prospects in FY2009," Chief Executive S. Ramadorai told reporters. "We will continue to be watchful of the external environment, especially the U.S. market."
Chief Operating Officer N. Chandrasekaran said Tata Consultancy, which said last month that two of its 15 biggest clients had delayed some projects in the March quarter, had a "healthy" deal pipeline.
"Specific financial clients in the U.S. have had some difficulties. So, there have been delays in starting of projects and in assured ramp-ups," he said. "But the deal pipeline is encouraging and ramp-ups have started happening."
Indian software exporters get the bulk of their revenue from banks and financial firms, sectors which have been battered by the turmoil in global financial markets.
Competent workers and cheaper wages have helped India's export-driven software services firms win large outsourcing deals from overseas clients, but growing evidence of a U.S. recession is a major concern.
India's $64 billion software services sector gets more than half its revenue from the world's largest economy.
Tata Consultancy, part of the Tata Group that has interests in cars, commodities and services, said net profit in the March quarter rose 7 percent to 12.56 billion rupees ($314 million) from 11.73 billion a year ago under U.S. accounting rules.
Revenue rose 18.4 percent to 60.95 billion rupees, as the company added 53 new clients during the quarter including six deals worth more than $50 million.
A Reuters poll of 15 brokerages had forecast a mean net profit of 13.75 billion on revenue of 62.37 billion rupees in the company's fiscal fourth quarter.
Tata Consultancy does not provide earnings guidance.
"The numbers are quite disappointing," said Harit Shah, a sector analyst with Angel Broking.
"Its peers have recorded much better performance in the quarter. This is obvious that the company had few clients delaying their projects in the recent months."
Earlier on Monday, No. 4 software services exporter Satyam Computer Services missed market estimates for quarterly profit, but gave a strong outlook despite uncertainty about how a U.S. slowdown will hurt outsourcing deals.
Tata Consultancy's rivals Infosys Technologies and Wipro both just missed market forecasts last week and sounded cautious on the short-term outlook on global economic uncertainty, but were confident about long-term prospects.
Mumbai-based Tata Consultancy, valued at more than $24 billion, plans to hire 30,000-35,000 gross staff in 2008/09, compared with 22,116 net employees added last year taking the tally to more than 111,000.
Ahead of the announcement, shares in Tata Consultancy, which counts General Electric, AGL Energy, and Qantas Airways among its clients, ended 0.8 percent down at 992.55 rupees in a Mumbai market that rose 1.6 percent.
(Additional reporting by Catherine Bosley in MUMBAI and Sumeet Chatterjee in BANGALORE)
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