Tata Consultancy Services Ltd missed analysts' earnings estimates as clients, especially banks, turned abruptly cautious about spending amid a crisis in the US and Europe.
Net profit rose 15% to ₹11,392 crore in the March quarter, TCS said in a statement on Wednesday. Profit rose 5% from the preceding three months. Analysts had estimated a profit of ₹11,530 crore on average, according to a Bloomberg poll. Sales rose 17% to ₹59,160 crore.
As people return to pre-pandemic activities and offices, the spike in demand that Indian IT companies saw during the peak of the covid-19 pandemic from digitization spending by clients is tapering.
In addition, the impact of higher interest rates and the collapse of banks in the US and Europe have forced many companies to curb their spending.
Sequential rupee revenue growth slowed to 1.6%, primarily due to sluggishness in the banking, financial services, and insurance (BFSI) sector. This quarter, BFSI saw a modest 9.1% growth, compared to 16.6% in Q3FY23.
Rajesh Gopinathan, the outgoing managing director and chief executive, painted a picture of caution.
“Last quarter, we expected North America to recover through the start of the year meaningfully. This recovery has obviously not materialized and turned out to be more negative, or slower than what we originally expected — and the numbers show that as well," Gopinathan said.
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