Stocks to open higher; RBI move eyed

Stocks to open higher; RBI move eyed

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TCS joins the IT party, posts 47% rise in net

MUMBAI: India’s largest software exporter Tata Consultancy Services (TCS) joined rival Infosys in signalling an improving environment for the country’s $60-billion IT industry, as increased spending from top customers such as Citibank and General Electric boosts profits.

TCS is the second major Indian information technology firm to report strong quarterly results, underscoring optimism about a recovery, after a severe downturn crimped margins and profit growth in 2009. Earlier this month, Infosys made a thumping statement on business recovery by forecasting a 16-18% growth for this financial year, awarded wage hikes of 14% and revealed plans to recruit 30,000 employees.

On Monday, Mumbai-based TCS posted the fastest profit growth in three years by reporting a 47% jump in fourth-quarter profit to Rs 1,931 crore. Revenue rose at a more sluggish pace of 7.9% to Rs 7,377 crore.

“The profit growth looks awesome, makes me want to say IT’s back. The revenue growth, however, doesn’t seem that amazing,” said an analyst with an MNC broking house.

TCS’ profit was boosted by Rs 42 crore of gains due to currency fluctuations while a 3.6% appreciation in the rupee impacted operating profit margins by 1.92%.

“While FY10 has been a challenging year, we have used this time to improve efficiencies and generate better returns by boosting margins. Our cost base has remained constant and we have leveraged this to support higher business growth,” N Chandrasekaran, CEO and MD of TCS, said.

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Src: ET and DP blog