India’s No.1 IT services exporter Tata Consultancy Services missed second-quarter revenue estimates and warned that its clients were still hesitant to spend on discretionary projects amid inflationary pressures and high interest rates.
The firm’s consolidated revenue from operations for the three months ended Sept. 20 rose 7.9 per cent to 596.92 billion rupees, but fell short of the analysts’ average estimate of 602.44 billion rupees, according to LSEG data.
Revenue at TCS’s mainstay banking, financial services and insurance (BFSI) segment, which generates more than a quarter of the total revenue, fell 0.5 per cent on a constant currency basis from a year ago.
The Mumbai-based company marginally beat profit estimates, posting an 8.7 per cent rise in profit to 113.42 billion rupees ($1.36 billion). Analysts, on average, had expected a profit of 113.17 billion rupees, according to LSEG data.
TCS CEO K Krithivasan blamed the weakness on the uncertain macroeconomic environment.
“We are able to sign new projects. But (they are) not compensating for the degrowth happening as clients are pausing some of the projects and there are some deferrals. While the order book is strong, it is not reflecting (in) the revenue growth.”
TCS said its order book for the July-September period stood at $11.2 billion, higher than the $8.1 billion worth of deals it signed a year ago.
The company is the first among its peers to report quarterly results, setting the tone for an industry worth $245 billion that is staring at an uncertain demand environment in the U.S. and Europe, its key markets.
Meanwhile, TCS approved a share buyback worth 170 billion Indian rupees ($2.04 billion). It had last bought back shares worth 160 billion rupees in 2020.