Bangalore, January 12: India’s second largest software exporter Infosys posted Tuesday a smaller-than-expected fall in net profit due to fresh overseas business and predicted strong future growth.
The company raised its outlook for revenues, expressing confidence that business income would improve in coming quarters, but said the rise in the rupee against the dollar was a concern.
The 4.87 percent decline in earnings to 15.6 billion rupees (344 million dollars) during the three months to December allowed the firm to increase its forecast for the full year to the end of March.
Analysts had estimated profits for the Nasdaq-listed firm would be near 14.7 billion rupees for the quarter.
Infosys shares rose 3.72 percent or 92.65 rupees to 2,581.2 rupees in late afternoon trade Tuesday, after the earnings were announced.
Revenues, by Indian accounting standards, for the Bangalore-based outsourcer fell 0.8 percent to 57.41 billion rupees, it said in a statement to the Mumbai stock exchange.
By US accounting norms, Infosys said net profit grew by a marginal 0.6 percent to 334 million dollars, for the December-ended quarter.
The company raised its full-year guidance, forecasting revenues in the range of 4.75 and 4.76 billion dollars for the fiscal year ending March 2010, a 1.8 to 2.0 percent rise.
“The global economic recovery seems to be led by the US and the Financial Services,” said S. Gopalakrishnan, chief executive of Infosys, in a statement.
“Even though IT budgets are expected to be flat in 2010, offshore outsourcing is expected to benefit from this recovery.”
Infosys added 32 new clients and a net 4,429 employees in the quarter.
“The earnings were better than expected. The guidance is also strong,” Gaurav Dua, head of research with local brokerage Sharekhan, told AFP.
“Strong volume growth and higher staff recruitment are all positive signs for the future.”
Infosys said it saw strong growth in markets it had recently entered, having incoporated in the third quarter its wholly owned Brazilian subsidiary and opened its first office in Wellington, New Zealand.
“The results clearly show the worst is behind and recovery started,” Gopalkrishnan told reporters on Tuesday.
“No one predicted recovery will be so fast, just as no one saw that the meltdown would be so rapid.”
“On the flip-side, currency volatility in the short-term is going to be a challenge,” he added.
India’s rupee has surged to a 15-month high against the dollar, currently quoting at 45.4. Foreign currency earnings of India’s software companies get impacted as they bill their US-based clients in dollar terms.
Infosys said it expected a better 2010, as investments in infrastructure, manpower, training, sales and marketing would improve.
“The results suggest that recovery has set in and the big four software firms could break away from the pack,” said Viju George, analyst with Edelweiss Securities.
India’s largest software exporter Tata Consultancy, part of the tea-to-steel Tata Group conglomerate, will report third quarter earnings on Friday.
—Agencies