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Rediff.com  » Business » Boom to doom: TCS warns of weaker Q4 earnings

Boom to doom: TCS warns of weaker Q4 earnings

March 20, 2014 09:04 IST

Boom to doom: TCS warns of weaker Q4 earnings

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After Infosys, the country's largest software services firm Tata Consultancy Services has warned of weaker earnings for the January-March quarter.

TCS, in a management commentary, said the fourth quarter of the financial year is expected to be weaker than October-December and is typically so for IT services firms on account of furloughs.

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Image: Fourth quarter of the financial year is expected to be weaker than October-December
Photographs: Courtesy, TCS

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Boom to doom: TCS warns of weaker Q4 earnings

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The fourth quarter is seasonally weaker than the third, it said. Europe is growing well, while the US and the UK are growing at "company average," TCS said. Weakness in India continues and is "likely to de-grow again," it said.

TCS posted a 50.3 per cent increase in consolidated net profit at Rs 5,333 crore (Rs 53.33 billion) in the October-December quarter, while revenue rose 32.5 per cent to Rs 21,294 crore (Rs 212.94 billion). 

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Image: Fourth quarter is seasonally weaker than the third.
Photographs: Reuters

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Last week, India's second-largest IT services exporter Infosys expressed caution on the business environment and warned that its near-term performance could be choppy.

"At a broad level, we are seeing slowdown with unanticipated rampdowns and some cancellation of our projects," Infosys CEO SD Shibulal had said.

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Image: Infosys CEO SD Shibulal
Photographs: Reuters

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Boom to doom: TCS warns of weaker Q4 earnings

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The company hinted that its full-year sales may be "near the lower end" of its guidance, sending Infosys shares down about 9 per cent.

TCS, however, is confident that 2014-15 would be better than the ongoing financial year, driven by an uptick in discretionary spending. 

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Image: TCS is confident that 2014-15 would be better.
Photographs: Reuters
Tags: TCS

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Verticals such as media and life sciences are showing good growth whereas BFSI, retail, manufacturing, telecom and hi-tech are growing on par, it said.

TCS expects minimal impact of currency, with no difference between constant currency revenue and revenue in dollar terms. 

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Image: Media and life sciences are showing good growth.
Photographs: Reuters
Tags: BFSI , TCS

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There could be a "10-20 basis points difference between constant currency revenue and INR revenue," it said, adding that other income is likely to be flattish quarter-on-quarter.

Shares of TCS fell 3.84 per cent on Wednesday to close at Rs 2,040.95 on the BSE. 


Image: TCS Chief Executive Officer and Managing Director N Chandrasekaran.
Photographs: Reuters
Tags: TCS , INR , BSE

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