TCS revenue growth 3 per cent in Dec quarter, below expectations

India's largest IT services exporter Tata Consultancy Services (TCS) has reported 3 per cent sequential revenue growth in dollar terms for the quarter ended December.

Revenue stood at $3.44 billion on the back of a strong showing from industries such as life sciences and health care, manufacturing, media, travel and hospitality, and telecom.

The numbers, however, were below analysts' expectations, many of whom had anticipated that the company would post growth above 3 per cent.

In profit growth, however, TCS beat street estimates. Profits stood at Rs 5,314 crore or Rs 27.13 a share, up from Rs 4,702 crore or Rs 24 a share in the previous quarter.

The operating margin was 29.7 per cent with the company reporting an utilisation of 84.3 per cent, one of the highest in the industry.

TCS declared a dividend per share of Rs 4.

TCS's dollar revenue growth, however, was lower than smaller rival HCL Technologies which grew 4 per cent in the December quarter to touch $1.3 billion. However, it was ahead of Infosys which reported an increase of 1.7 per cent over the September quarter reaching $2.1 billion.

In rupee terms, the company grew 1.5 per cent to Rs 21,294 crore in the December quarter.

The company increased its hiring target for the year to 55,000 from 50,000, a reflection of the improved demand environment.

CEO N. Chandrasekaran said he believes 2014 will be a better year for the company than 2013. "Strong international demand for our services and discipline in execution has helped TCS maintain its momentum," he said. "Our diversified market presence and services portfolio have helped us overcome seasonal weakness and soft demand in the Indian market."

Although TCS missed dollar revenue expectations, analysts seemed happy.

"In dollar terms, we were expecting a 4 per cent growth. The volume growth came in lower than expected. However, I am not disappointed given the seasonally weak quarter. The company's commentary is positive and it expects next year to be stronger. The stock is not going to react much tomorrow," Sanjeev Hota, analyst with brokerage house Sharekhan, said.  

TCS reported results on Thursday after markets closed. The company's stock closed marginally down at Rs 2,351.35 on the Bombay Stock Exchange. The BSE Sensex was also flat at 21,265.18.