India's Tata Consultancy beats third-quarter profit estimates

Reuters
A private security guard stands at the exit gate of the headquarters of Tata Consultancy Services (TCS) in Mumbai, India October 13, 2016. REUTERS/Shailesh Andrade/File Photo

MUMBAI (Reuters) - India's biggest software services exporter Tata Consultancy Services Ltd (TCS) said it would continue to focus on expanding its digital business after beating analyst estimates with a 10.9 percent rise in profit for the quarter to December. The company's digital business grew 30 percent annually in the December quarter. "Our investments in digital, our investments in building the right skills in people are positioning us to capture that segment extremely well," TCS Chief Executive Officer N. Chandrasekaran said . India's $150 billion showpiece information technology (IT) sector struggled through 2016 as Western clients slowed discretionary spending ahead of the U.S. presidential election and Britain's surprise decision to leave the European Union. A leading industry lobby group also cut the IT sector's growth forecast for the fiscal year ending March 2017. But analysts expect 2017 to play out well for Indian software service exports as banking and financial services in the United States begin to loosen purse strings for tech spending. A pickup in U.S. banking and a recovery in demand in Britain and the EU as fears of an economic slowdown following Brexit ease are likely to boost IT spends, UBS said in a research note ahead of TCS results. Indian IT companies are also expected to speed up acquisitions in the United States, their biggest market, and recruit heavily from university campuses there as they try to beat a more protectionist visa regime expected under Donald Trump's administration. TCS's net profit for the third quarter rose to 67.78 billion Indian rupees ($995 million), from 61.10 billion rupees a year ago and ahead of analysts' estimates of 65.11 billion rupees. Revenue for the quarter rose 8.7 percent to 297.35 billion rupees. Meanwhile media reports said TCS's CEO Chandrasekaran will be appointed the new chairman of Tata Sons after Cyrus Mistry was ousted by the board in October. Rajesh Gopinathan, TCS's chief financial officer will replace Chandrasekaran as CEO of TCS, media reports said. Tata Sons declined to comment. (Reporting by Sankalp Phartiyal and Suvashree Dey Choudhury; Editing by Susan Fenton)