Mumbai, July 13: Tata Consultancy Services today reported a near 6 per cent drop in first-quarter net profit at Rs 5,950 crore against Rs 6,513 crore recorded a year ago.

Analysts had expected the country's largest software exporter to log a net profit of around Rs 6,200 crore.

One of the key factors that contributed to the muted performance of the company during the quarter was the appreciation of the rupee.

According to V. Ramakrishnan, chief financial officer of TCS, the quarter was marked by high currency volatility, including a sharp appreciation of the rupee against the dollar, which resulted in a Rs 650-crore loss in reported revenues.

Wage hikes given by the company during the period also impacted its profitability by Rs 450 crore.

However, revenues were in line with estimates. TCS posted revenues of Rs 29,584 crore against Rs 29,305 crore in the same period of last year.

Speaking to reporters here today, Rajesh Gopinathan, CEO & managing director of TCS, said the company delivered a steady performance despite a challenging operating environment.

While the North American market grew close to the company average, Europe put up a robust show during the period. In constant currency terms, Europe showed a growth of 5.9 per cent sequentially.

In terms of growth by verticals, the performance of retail and BFSI (banking, financial services & insurance) was tepid though all the other industry segments showed a growth of more than 3.5 per cent. On the other hand, digital services, which accounted for around 18.9 per cent of its revenues, showed a 26 per cent growth over the same period of last year.

TCS today announced that it is making some changes in the industry data reporting format.

To provide investors and analysts with a clearer picture of its core performance in industry verticals, the volatile markets have been clubbed into a single group called "regional markets and others".

This group includes regions (barring Americas, the UK, Europe and Australia) where businesses tend to be more volatile on account of their project-centric nature. During the quarter, they contracted 3.6 per cent on a sequential basis.

"We have seen steady growth across industries in the first quarter. We have had excellent wins across all markets and have a good deal pipeline across industries that positions us well for growth in 2017-18," he added.

Giving a positive outlook for the year, Gopinathan said TCS expects a combination of strong demand for small projects and some amount of large transformation deals.