Why India's TCS Q3 revenue tops estimates?
Technology
Why India's TCS Q3 revenue tops estimates?
BENGALURU (Reuters) - India's top software services exporter Tata Consultancy Services (TCS.NS) reported a better-than-expected rise in third-quarter revenue on Thursday, helped by the strong performance in the UK
The results come months after the Tata company won large deals in the region, including a $1.9 billion contract with the National Employment Saving Trust and another $1 billion deal with group firm Jaguar Land Rover.
"The UK has improved because some of the mega deals they had won last year were based in this region," said Ruchi Burde Mukhija, an analyst at Elara Capital, adding that these deals may have started "firing."
Consolidated revenue grew 4% to 605.83 billion rupees ($7.30 billion) in the three months to Dec. 31, beating analysts' average estimate of 601.47 billion rupees, according to LSEG data.
Revenue grew 8.1% in the UK market, but fell 3% in North America, due to extended furloughs and clients cutting discretionary spending amid macroeconomic challenges.
Consolidated profit rose 2% to 110.58 billion rupees, including an impairment charge of 9.58 billion rupees related to a trade secrets lawsuit filed by Epic Systems.
Meanwhile second-ranked Infosys (INFY.NS) missed third-quarter profit estimates. Smaller rivals Wipro (WIPR.NS) and HCLTech (HCLT.NS) are set to report their earnings on Friday.
"The pain will not go away as the model needs to shift from labour arbitrage to technology arbitrage," said Phil Fersht, the CEO at tech advisory firm HFS Research.
"We are going through a genuine inflection point in the IT services industry after 25 years of double-digit (revenue) growth."
TCS secured deals worth $8.10 billion in the quarter, down from $11.2 billion in July-September. The industry leader had secured deals exceeding $10 billion in each of the three preceding quarters.
Banking and financial services, constituting 37% of revenue, contracted 3% in the latest quarter.
