Infosys Q3 net at Rs 2,369 cr; higher rev guidance cheers market
Bangalore: Infosys Ltd, India's second- largest software exporter, Friday posted stronger-than-expected quarterly profits and raised its full-year sales forecast, triggering a 16 percent surge in its stock price.
Net profit at Rs 2,369 crore in October-December was marginally lower than Rs 2,372 crore logged in the same period a year ago, but higher the market expectations.
That prompted Infosys to raise its sales forecast by about 3 percent to Rs 40,746 crore, including USD 104 million in additional revenue following the acquisition of Switzerland -based consultancy Lodestone Holdings.
The company signed eight large outsourcing deals worth USD 731 million in the quarter and has a "strong pipeline of large deals" and is "cautiously optimistic" about the current quarter, Infosys Chief Executive Officer and Managing Director SD Shibulal told reporters here.
Infosys scrip jumped as much as 16 percent, the biggest advance since it began trading in 1993. It was the largest gainer on the BSE India Sensitive Index, followed by competitors Wipro and Tata Consultancy Services.
In the October-December quarter, revenues (including that of acquired Swiss firm Lodestone) were up 12.1 percent to Rs 10,424 crore.
Revenues stood at Rs 9,298 crore in the year-ago period.
"We have done well in this quarter despite an uncertain environment," Shibulal said, adding that client addition has been one of the highest in the last few quarters.
The net addition was 25 clients which excludes Lodestone.
In dollar terms, profit dipped by 5.2 percent to USD 434 million in the reported quarter, but revenues were up by 5.8 percent to USD 1,911 million in the quarter under review.
The company has raised its sales forecast for FY'13 to be "at least USD 7.45 billion" (from USD 7.34 billion stated earlier), including USD 104 million in additional revenue from Lodestone. This is about 6.5 percent growth over last year.Infosys had guided to a dollar revenue growth of 8-10 percent at the start of the fiscal, but later slashed it to 5 percent, citing uncertain economic environment.
The company's scrip was trading at Rs 2,702 at 1500 hrs, up 16.45 percent from the previous close on the BSE.
Analysts had expected Infosys to further cut its annual sales growth after it warned last month that US clients were cutting back on projects and there were delays in the signing of deals.
"Infosys surprised the street with better-than-expected results for Q3, FY'13 and also raised its full year guidance, contrary to our as well as street expectations of reducing it," Angel Broking Research Associate (IT) Ankita Somani said.
Meanwhile, Infosys said it will promote 6,000-9,000 people in the current quarter. Although the company has not yet set the hiring target for FY'14, it has made about 6,000 campus offers.
During the quarter, Infosys added 7,499 (gross) and 977 (net) employees, taking the total headcount to 1,55,629.
The company said it gave a wage hike averaging 6 percent to offshore employees during the quarter and will increase salaries of onsite workers by 2-3 percent in the January- March quarter.
"We maintained margins despite the wage hike given offshore. The onsite wage hike will impact our margins by about 1 percent in the fourth quarter," Infosys CFO Rajiv Bansal said.
Industry analysts said the upward revision of full year guidance is a "good sign" and is an indication of return to confidence for Infosys.
"Infosys results are finally coming closer to reflecting the demand reality, and if this sustains for the next two quarters, it could indicate that the worst phase of the company is behind it," Gartner India Country Manager (Research) Partha Iyengar said.
The upping of full year guidance is also a good sign that shows some semblance of a return to confidence for Infosys, which was quickly becoming a "negative outlier" amongst the Indian services majors, he added.
The USD 100 billion Indian IT-BPO sector gets about 80 percent of its revenues from the US and and Europe.
October-December quarter is traditionally weak as the number of working days are fewer. Tata Consultancy Services (TCS) will announce its third quarter results on January 14, followed by HCL Technologies and Wipro on January 17 and 18.
Infosys' liquid assests, including cash and equivalents, available-for-sale financial assets, investments in certificates of deposits and government bonds were Rs 22,501 crore, as against Rs 22,570 crore as on September 30.
During the third quarter, Infosys applied for seven patent applications in India and the US and with this, it has 525 patent applications in India, US and other jurisdictions, Shibulal said.
The company has been granted 71 patents by the US Patent and Trademark Office and two patents by the Luxembourg patent office, he added.
Infosys American Depository Shares (ADS) have started trading on the New York Stock Exchange (NYSE) under the ticker symbol "INFY", Shibulal said.
"The company is in process of listing its ADS on the Paris and London exchanges of NYSE Euronext," he added.