NEW YORK (TheStreet) -- Patni Computer's (PTI) - Get Report third-quarter earnings topped analysts' estimates, similar to how its larger peers Infosys Technologies (INFY) - Get Report, Wipro Technologies (WIT) - Get Report, and Tata Consultancy Services showcased strong earnings momentum.
The company posted higher-than-estimated consolidated net profit of $28.7 million, a 9.5% sequential decline. The reduction in profitability from the second quarter was expected as India's IT sector copes with a demand slowdown, higher wages, and overall increases in expenses. A dip in utilization rates and higher onsite mix were also responsible for gross margins narrowing 110 basis points to 33.9%.
Patni's sales rose 6.7% on growth in most of its segments. The insurance and product engineering segments grew at 8.5% and 11.3%, respectively.
Revenue from the U.S., which contributes around 80% of total revenue, stabilized, while revenues from Asia-Pacific is seeing an increase. The business process outsourcing segment has seen a spurt in demand, while the package software implementation segment's pick-up was slower. Overall, the company managed to add 13 new clients, taking the count to 282.
For the fourth quarter, Patni forecasts net profit of $22.5 million to $23 million, on a constant currency basis, and revenue of $180 million to $181 million. The company expects a mark-to-market foreign exchange gain of $1.5 million in the December quarter, amid concerns of a stronger rupee.
Commenting on growth prospects, CEO Jeya Kumar said, "We will have more visibility into IT spending budgets over the next couple of months, including discretionary spending. Our portfolio balancing efforts are on track and we remain optimistic of our mid- to long-term growth prospects."
The company recruited around 1,700 employees, in line with higher demand.