Tata Consultancy Services Ltd (TCS), India's No.1 software services exporter, posted a 23 per cent rise in quarterly profit, joining rival Infosys Ltd in topping market forecasts and adding to expectations for a revival in corporate technology spending.
Net profit rose to 35.52 billion rupees for the quarter ended December from 28.87 billion rupees a year earlier, TCS said on Monday. That compares with an average estimate of 32.43 billion rupees in a poll of 19 analysts, according to Thomson Reuters.
India's $100 billion IT services sector has been under pressure to sustain growth as clients in key markets including the United States and Europe maintain a cautious stance on tech spending due to an uncertain global economy.
Fuelling expectations the sector may be turning a corner, second-ranked Infosys Ltd on Friday raised its full-year revenue forecast after new clients and an acceleration in IT spending by existing customers helped the Bangalore-based company post a stronger-than-expected quarterly profit.
TCS, which does not provide detailed revenue forecasts, has said it expects to beat the industry's export revenue growth forecast set by the National Association of Software and Service Companies (NASSCOM).
In November, NASSCOM said the sector was likely to meet the lower end of its revenue growth outlook of 11-14 per cent for the year ending in March.
"We believe clients are going to invest in making their operations 'digital ready' in 2013 and drive business growth," TCS CEO N Chandrasekaran said in a statement, adding that TCS was well-positioned to take advantage of those opportunities.
The company increased the number of clients contributing $100 million or more in annual revenues to 16 from 14 during the December quarter, the company said. Net staff additions were 9,561, taking total headcount to 263,637.
Shares of TCS, valued by the market at $48 billion, closed 2.15 per cent higher at 1334.50 rupees ahead of the results, extending Friday's 3.82 per cent gains on unexpectedly strong results from rival Infosys, which ended 3.5 per cent higher on Monday. The broader market was up 1.22 per cent.
Wipro Ltd , the country's No.3 software services provider, may report a quarterly profit gain of 6.7 per cent, analysts said. The company, which is spinning off its non-information technology businesses and focusing exclusively on IT, will announce its earnings on January 18.
Fourth-ranked HCL Technologies Ltd is expected to report a 43.8 per cent jump in quarterly profit on January 17.