Tata Consultancy Drops to Three-Month Low on Earnings Outlook

Tata Consultancy Services Ltd. (TCS), India’s biggest software exporter, fell to the lowest level in three months after the company said growth in this quarter will be weaker than the previous three months.

Shares of the Mumbai-based company fell 3.9 percent to 2,039.40 rupees at the close in Mumbai, the lowest level since Dec. 16, according to data compiled by Bloomberg. The benchmark S&P BSE Sensex index was unchanged.

“4Q is a seasonally weak quarter, weaker than 3Q,” the company said yesterday in an analyst presentation, a copy of which was e-mailed to Bloomberg by Kedar Shirali, head of global investor relations. Other income is likely to be “flattish” quarter-on-quarter, according to the document.

Tata Consultancy reported 6.83 billion rupees in other income in the third quarter ended Dec. 31, according to an exchange filing.

Rival Infosys Ltd. (INFO) plunged the most in 11 months on March 13 after officials told investors that annual sales growth may be at the lower end of its projections and lag behind industry forecast.

“The information technology sector, especially Tata Consultancy, has given good returns in the last two years and investors make profits by selling on any bad news around these stocks,” Urmil Shah, a Mumbai-based analyst at Kim Eng Securities Pvt. said on phone today. “These stocks are down as investors are focusing more on short-term concerns rather than long-term prospects.”

Shah said he attended yesterday’s analysts meet at Tata Consultancy.

Shares of the software maker rallied 73 percent last year, the fourth-best performer on the 10-member S&P BSE Infotech Index. HCL Technologies Ltd. jumped 104 percent.

Tata Consultancy’s sales rose 33 percent to 212.9 billion rupees ($3.5 billion) for the quarter ended Dec. 31 from a year ago, falling short of the 214.2 billion-rupee median estimate provided by analysts. Net income rose 50 percent to 53.1 billion rupees. Chief Executive Officer N. Chandrasekaran said Jan. 16 he expects little growth for the company in India for the next two quarters.

To contact the reporters on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net; Ameya Karve in Mumbai at akarve@bloomberg.net

To contact the editors responsible for this story: Niveditha Ravi at nravi2@bloomberg.net Sam Nagarajan, Karthikeyan Sundaram

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