India's TCS misses first quarter revenue view as CEO flags demand contraction
Consolidated sales at India's largest IT services firm by revenue rose 1.3% year-on-year to 634.37 billion rupees ($7.40 billion) in the June quarter against analysts' average expectation of 646.66 billion rupees, as per data compiled by LSEG.
Uncertainty around U.S. tariffs has quashed IT companies' hopes of a revival in client confidence and spending in its biggest market. A survey, opens new tab in May showed two in five tech executives had deferred discretionary projects.
"The continued global macro-economic and geo-political uncertainties caused a demand contraction," TCS CEO K Krithivasan said.
TCS is the first Indian tech major to report results. Rival HCLTech (HCLT.NS), opens new tab reports next week, while Infosys (INFY.NS), opens new tab the week after that.
Last month, IT bellwether Accenture's (ACN.N), opens new tab shares dropped as much as 6% after it reported tepid deal-booking numbers in its quarterly results.
TCS's revenue in four out of its six verticals fell compared to the same period last year, while banking and financial services' revenue grew 1% and tech services rose 1.8%.
Its total order bookings stood at $9.4 billion during the quarter, from $12.2 billion in the previous quarter and $8.3 billion in the year-ago period.
"Deal wins remained muted, with client losses in larger contracts and flattish margins," said Sagar Shetty, research analyst at StoxBox.
"While green shoots in banking and tech verticals offer some respite, softness in U.S. and Europe raises demand concerns," he said.
TCS's net profit rose 6% in the three-month period to 127.60 billion rupees against analysts' estimate of 122.16 billion rupees. The profit beat was largely because of a wage hike delay and a jump in other income.
Its shares listed in Mumbai closed 0.1% lower ahead of the results.
($1 = 85.6690 Indian rupees)
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