Tata Consultancy shares rise on deal wins, hiring promise

By Nivedita Bhattacharjee

BENGALURU (Reuters) – Shares of Tata Consultancy Services Ltd rose as much as 7.9% on Friday as investors shrugged off the software service firm’s warning on coronavirus risks to focus on sales wins and its promise to push ahead with hiring this year.

Mumbai-based TCS saw consolidated revenue for the fourth quarter grow 5.1 percent to 399.46 billion rupees. The company, which reported fourth quarter results late on Thursday, also said it would not lay off employees and would honour all new job offers, including to around 40,000 new graduates.

IT services firms like TCS, Wipro Ltd and Infosys Ltd depend on armies of engineers to service corporations across the world, especially in North America and Europe.

“The pandemic is expected to pose continued near-term challenges on demand, supply, pricing and working capital fronts. Nevertheless, we expect TCS to be relatively better positioned versus the sector to navigate these challenges,” analysts at Motilal Oswal said.

TCS posted results a day after rival Wipro said it would not give a forecast for the current quarter, blaming uncertainties due to the coronavirus outbreak, which saw a wide-ranging national lockdown in India extended this week into May.

Wipro CEO Abidali Neemuchwala said the company, the first of India’s big global outsourcers to report, was already seeing budget reductions, cuts or changes in spending by clients and pricing pressures.

TCS also flagged a hit from the pandemic, saying it had “completely reversed” the positive momentum from the first half of the fiscal year.

Still, Chief Executive Officer Rajesh Gopinathan said the company saw “very strong deal closures” during the quarter. The company had amongst the lowest attrition rates in the industry, saw operating margin rise 25.1% during the reported quarter and announced a dividend of 6 rupees.

“Organizations across the world are realizing the need for operational and systems resilience,” Gopinathan said.

“Many of the large deals we signed during the quarter address precisely that need. They are core transformation programs that leverage the power of technology to make our

customers’ operations leaner, faster, and more resilient.”

Shares of the TCS were trading up 5.6% at 0551 GMT.

(This version of the story drops extraneous word in first paragraph)

(Reporting by Nivedita Bhattacharjee in Bengaluru; editing by Patrick Graham)