INDIAN IT outsourcing giant Infosys reported on Friday (July 12) a nearly four per cent rise in quarterly net profit and kept its market forecast intact, driving the firm’s shares up 15 per cent.
Infosys, whose earnings are seen as a sector bellwether, said net profit rose 3.7 per cent to 23.74 billion rupees ($396m/£262.21bn) for the first quarter to June, from 22.89 billion rupees a year earlier – in line with market forecasts.
Despite “an uncertain macro environment, changing regulatory regime and a volatile currency environment, we have done well in the first quarter”, said Infosys chief executive S D Shibulal.
Infosys, the country’s second-biggest software services exporter, is “cautiously optimistic about (the) rest of the year,” Shibulal said.
The Nasdaq-listed firm’s earnings were driven by contract wins and foreign exchange gains, a company statement said.
Shares climbed 15 per cent in early trade on the earnings and an announcement that Infosys was sticking by its six to 10 per cent revenue growth projection for the fiscal year to March 2014.
Infosys director Asok Vemuri said there was “some amount of resurgence and buoyancy in the US”, which contributes over 60 per cent of the company’s revenues.
The company's shares retraced some of their gains but still closed up nearly 11 per cent at 2,802.75 rupees ($46.79/£30.98).
“The earnings are positive as was the stable revenue outlook,” said Ankita Somani, analyst with Mumbai’s Angel Broking.
Infosys last month recalled company founder Narayana Murthy, who had retired two years ago at the age of 65, to serve as executive chairman in a bid to revive the company’s fortunes.
Murthy’s return comes at a time when the company has been struggling with weak earnings and falling market share to rivals such as Tata Consultancy Services and HCL.
The Bangalore-based Infosys is seeking to reinvent itself with a strategic overhaul to focus on higher value software and consulting services instead of labour-intensive outsourcing services.
Bhuvnesh Singh of Barclays Capital said: “Clearly some parts of Infosys new strategy are working, although numbers could remain volatile in the near-term.”
The company has seen a major reshuffle of its top management over the past two years, including the exit of several of its founders.
Three decades ago, Murthy, who has an iconic stature in Indian business as a pioneer of the country's flagship outsourcing industry, sat around a kitchen table with six others and created Infosys.
Last month, Murthy told shareholders after he was called back the task to rebuild a “desirable” Infosys could take at least 36 months and tough decisions would have to be taken which would result in “pain”.
Murthy called his “second innings” at the helm of the company something that he had not imagined in his “wildest dreams”.
The firm added 66 clients and a net 575 employees in the three months to June.
