By Anshuman Daga
BANGALORE: Infosys Technologies soundly beat forecasts for second-quarter revenue growth on Thursday and raised its full-year sales outlook in anticipation of a boom in outsourcing. Infosys said July-September revenue jumped 15 percent from the preceding quarter to Rs 8.8 billion ($182 million), while net profit rose four percent to Rs 2.26 billion.
A Reuters poll had forecast that Infosys, which usually delivers more than it promises, would post net sales of Rs 8.02 billion and a net profit of Rs 2.29 billion. The robust revenue growth was mainly driven by big-ticket clients that it picked up last year, S Gopalakrishnan, deputy Managing Director, told a news conference.
The company raised its full-year guidance for revenue growth to 30-31 percent in dollar terms, from the earlier 17-20 percent. It retained its profit estimate of a 16-19 percent increase.
"The company has proved that it's in a different league," said London-based Avinash Vazirani, chief investment officer for South Asia and Africa at BNP Paribas Asset Management, which has an exposure of about $200 million to Indian shares.
Infosys' American Depositary Receipts surged 9.95 percent to $61.56 in early trade on Thursday, rising above their 200-day moving average. The Nasdaq index was up 2.06 percent. Infosys shares closed up nearly five percent on the Bombay Stock Exchange at a three-week high after it raised the guidance forecasts, outpacing other tech stocks' gains in a sluggish market.
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Software services contracts from Infosys' larger clients are growing in size, its sales chief Basab Pradhan told Reuters. "The percentage of their IT budget coming to us is going up. So our share of their wallet is increasing," said Pradhan, who took over the job in July after Phaneesh Murthy, the former sales chief, quit to defend himself in a sexual harassment suit.
Pradhan said Infosys was bidding for multi-year outsourcing contracts, each worth about $50 million a year. Analysts expect Indian companies to clinch new contracts that are significantly larger than the current ones, which now have an average size of about $25-$30 million a year. This marks a shift away from a reliance on shorter projects billed by the hour.
"Through the industry downturn in the past few years, we have always believed large Indian companies will be able to garner more business, and we see this clearly happening," said Gul Teckchandani, chief investment officer at Sun F&C Mutual Fund.
Infosys accounts for seven to 10 percent of Sun F&C's total investments of about $250-$300 million in Indian equities through global and Indian funds that it manages and advises.
(US$1 = Rs 48.35)
© Reuters