Infosys third quarter profit up 21.4 percent

January 11, 2014 - 2:23:17 am

MUMBAI: Indian outsourcing giant Infosys reported yesterday a better-than-expected 21.4 percent jump in quarterly net profit, led by improved demand from Europe and the United States.

The company also hiked its full-year revenue outlook, driving up its shares as much as 3.6 percent to 3,575.2 rupees, near its record high of 3,581 rupees.

“The year ahead looks exciting for the IT services industry,” said the company’s Chief Executive S D Shibulal.

“We believe the global economic environment has improved and our clients are gaining confidence to invest in their strategic initiatives,” he said.

Consolidated net profit for the Nasdaq-listed firm climbed to Rs28.75bn ($463m) in the October-to-December quarter from Rs23.69bn in the same period a year earlier.

Analysts had expected Infosys to report a net profit of Rs27bn.

Revenues jumped 25 percent to Rs130.26bn in the third financial quarter from Rs104.24bn in the year-ago period.

The company’s results kicked off India’s quarterly earnings season.

It forecast revenues would increase by 11.5 to 12 percent in dollar terms for the fiscal year to March 2014 — a notch above its earlier outlook of 9.0-10.0 percent growth.

The company said the number of $100m-plus revenue clients rose to 15 in the quarter, from 12 a year earlier.

Chief executive Shibulal forecast global client IT budgets would be “stable” compared to last year.  Bangalore-based Infosys has been undergoing major changes with a string of departures by some of its senior staff since co-founder and business icon N R Narayana Murthy was pulled out of retirement last June in a bid to reboot the company’s fortunes.

Infosys — created three decades ago by Murthy and six others as they sat around a kitchen table — has been losing market share to rivals such as Tata Consultancy Services and HCL.

But Murthy yesterday said that he hoped to move back to a retired life before his scheduled five-year term ends.

“The board has asked to add value to the company and asked me to become its executive company for a five-year term... I am sure the board will allow me to retire earlier than the five-year term I had been appointed,” Murthy told reporters at the firm’s campus in the southern city of Mysore.

Murthy said he was “sad” at the departure of eight executives in the past two quarters but added that investors had nothing to worry about.

“For a company that focuses on leadership... it is sad to see many of the excellent people leave the organisation for various professional and personal reasons,” he said.

But “the beauty of the company is that it has a large number of leaders to run and take it forward,” he said.

In the quarter, Infosys added 54 clients and a total 6,682 employees.

Analysts called Infosys earnings a “mixed bag”.