India`s TCS misses profit estimates on higher expenses
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Tata Consultancy Services Ltd on Friday missed analyst estimates for June-quarter profit by a wide margin, as India's top IT exporter battled cost challenges despite strong deal momentum.
TCS is the first among its peers to report earnings, with investors looking to gauge the outlook for the sector which has had a stellar run in the past couple of years with companies expanding their digital offerings to operate during the pandemic.
IT companies have started seeing margin erosion due to higher employee-related costs and a moderation in deal wins due as macro-economic environment remains uncertain due to Russia-Ukrain war, higher inflation and higher interest rate environment.
"It has been a challenging quarter from a cost management
perspective," Shamir Sectarian, chief financial officer, said in a statement.
Operating margin for the quarter stood at 23.1%, down from 25.5% year ago, mainly due to impact of annual salary increase, elevated cost of managing the talent churn and gradually normalizing travel expenses, company said.
Total expenses rose 20% to 407.71 billion rupees from a year ago.
The Mumbai-based company's net profit rose 5.2% to 94.78 billion rupees ($1.20 billion) in the three months to June 30, from 90.08 billion rupees a year earlier.
Analysts on average had expected a profit of 98.51 billion rupees, according to Refining data.
Revenue from operations jumped 16.2% to 527.58 billion rupees.
