Tata profits up 34% on solid demand for software A jump in quarterly revenues boosted by recent falls in the rupee helped Tata Consultancy Services to post buoyant profits in the second quarter, underlining its position as India's largest software outsourcer by market share. The Mumbai-based group reported quarterly net profits of Rs47bn ($762m), up 34 per cent per cent year-on-year and well above market expectations, while its operating profit also crossed $1bn for the first time. The figures confirmed a return to robust demand for software services in US and European markets where TCS works for large multinational clients such as Walmart and General Electric, but where many companies had cut back on IT spending in the aftermath of the global financial crisis. The jump in net profits is also likely to provide a further boost to the group's shares, which have risen by roughly 50 per cent over the past 6 months, making TCS India's largest company by market capitalisation. The outsourcing sector has recently provided a haven to international investors worried about slowing growth in Asia's third-largest economy, and also a natural hedge against falls in the rupee, which benefits companies exporting software services to clients abroad. Even so, TCS's share price gains have outstripped those of its major competitors, while its performance in the second quarter was notably better than Bangalore-based rival Infosys, which posted broadly positive figures last week. Natarajan Chandrasekaran, chief executive, described the results as "a terrific set of numbers," and highlighted in particular the 30% growth in operating margins during the quarter, the highest in the company's history. In terms of where it came from it is pretty well rounded, all our markets were good. The United States, UK, Europe, Asia-Pacific, India . . . all our markets grew sequentially, and at a decent level," he said. Mr Chandrasekaran said rupee depreciation helped TCS, which is comfortably the most profitable company in the wider Mumbai-based Tata conglomerate, add around 3 percentage points to its operating margin during the quarter. Revenues jumped to Rs210bn, up 17 per cent compared with the same period last year, with an especially strong 32 per cent increase in continental Europe following the acquisition of midsize French IT group Alti SA during July. "These figures have easily beaten our expectations," says Dipen Shah, an IT analysts at brokerage Kotak Securities in Mumbai. TCS has a very effective sales and execution operation which allows them to produce great results quarter after quarter, and because of that they continue to deserve a premium against their competitors. Shares in the company closed up slightly at Rs2,215, an all-time high, before the release of yesterday's results.