Infosys Technologies Ltd (NYSE:INFY), India's second largest software services firm, reported Friday a better-than-expected net income after tax of $434 million for the quarter ended Dec. 31, 2012 against $431 million for the quarter ended Sept. 30, 2012.
Contrary to market expectations, Infosys raised its revenue outlook for the fiscal year ending Mar. 31, 2013 from 5 percent to 6.6 percent, sending shares up by over 15 percent in the Bombay Stock Exchange Sensex.
India's blue-chip IT company earned a consolidated net profit of 23.69 billion rupees for the third quarter of 2012-2013 fiscal year, up from net profit of 23.7 billion rupees a year earlier, compared to Reuters estimate of 21.0 billion rupees.
Revenues including Lodestone rose by 5.8 percent from a year ago to $1,911 million and excluding Lodestone revenues posted a 3.7 percent year-on-year growth at $1,872 million. The company upgraded its full year dollar guidance to $7.45 billion from $7.34 billion projected earlier.
Earnings per American Depositary Share (EPADS) was $0.76 for the quarter ended Dec. 31, 2012 against $0.75 for the quarter ended Sept. 30, 2012 and the company expects a consolidated EPADS of at least $2.97 for the fiscal year ending Mar. 31, 2013.
Analysts had expected Infosys to cut its annual sales growth forecast by 3.3 percent.
“We have done well in this quarter despite an uncertain environment,” S. D. Shibulal, chief executive officer and managing director, Infosys said.
“We continue to gain confidence from a strong pipeline of large deals. However, the broader economic environment remains difficult. Even so, we remain cautiously optimistic about the January-March quarter,” he added.
The company said it had bagged eight outsourcing deals worth US $731 million of total contract value and with subsidiaries added 53 clients during the quarter. The company also reported a gross addition of 7,499 employees (net addition of 977 employees) for the quarter.
“We were able to maintain our margins through efficiency improvements despite increased operating expenses. We remain focused on making the right investments for profitable and sustainable growth in the longer term", Rajiv Bansal, chief financial officer said.
India’s IT bellwether has been struggling to meet market expectations and retain its growth momentum in the first two quarters of the financial year 2012-13. Infosys had not given any quarterly guidance in its previous two quarterly results, mainly because of the volatile economic condition that exists in European countries and revised its forecast of revenues for the fiscal year 2013 in the first two quarters, disappointing the markets.
"The language of the guidance is slightly better this time with the company saying they have a strong pipeline. This is something we are hearing after a long time," Jagannadham Thunuguntla, strategist at SMC Global Securities, New Delhi, told Reuters.
The higher guidance has cheered the markets and the Infosys stock opened 11 percent higher at 2575 rupees on the BSE Sensex and shares were up by 15 percent - their biggest gain since 2009 - in morning trade after the earnings report.
"The market was slightly predatory, given that the last two times the company has disappointed, but this time the organic guidance is better... which I think will be taken positively," said Rikesh Parikh, vice president of markets strategy and equities, Motilal Oswal Securities in Mumbai, according to Reuters.