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Infosys profit up 5%; raises sales forecast for FY'16

Bengaluru: Infosys Ltd today reported better than expected 5 per cent rise in June quarter net profit and raised its full-year sales growth forecast as business revamp helped it win more IT contracts.The nation's second-largest

PTI [ Updated: July 21, 2015 17:34 IST ]
infosys profit up 5 raises sales forecast for fy 16
infosys profit up 5 raises sales forecast for fy 16

Bengaluru: Infosys Ltd today reported better than expected 5 per cent rise in June quarter net profit and raised its full-year sales growth forecast as business revamp helped it win more IT contracts.

The nation's second-largest outsourcing company reported consolidated net profit of Rs 3,030 crore, or Rs 13.26 per share, in the April-June quarter as against Rs 2,886 crore, or Rs 12.63 per share in the same period a year ago.

The firm, under its first non-founder chief executive, raised sales forecast for the financial year ending March 31, 2016 to 7.2-9.2 per cent in US dollar terms. The growth projection made in April was 6.2-8.2 per cent.

Infosys added 79 clients in the April-June quarter, winning contracts from companies including UK department store chain House of Fraser and UAE-based Sharjah Islamic Bank. Six deals were worth more than USD 50 million in value each.

Infosys shares soared 11 per cent, the biggest intra-day jump in two yeas, to close at Rs 1,112.65 on the BSE.  The consolidated revenue grew 12.4 per cent in the first quarter of the current fiscal to Rs 14,354 crore, from Rs 12,770 crore in April-June of 2014-15.  

“Our efforts in redesigning our clients' experience and our widespread adoption of innovation, both in grassroots and breakthroughs, are starting to bear fruit in large deal wins and in the growth of large clients,” Infosys CEO and Managing Director Vishal Sikka said.

Dipen Shah, Head of Private Client Group Research at Kotak Securities said Infosys' results beat its estimates on the revenue front.

“The highlight of the results was the strong constant currency revenue growth of 4.4 per cent, led by volume growth of 5.4 per cent. The volume growth was the best in the past 19 quarters,” he said.

Infosys is now focusing on leveraging new technologies like automation and artificial intelligence to improve win percentages. It has also acquired two companies—Skava and Kallidus—to add new technology capabilities and ramp up revenues.

Sikka was brought in about a year ago to help the country's second-largest software services firm regain ground lost to rivals like Tata Consultancy Services and HCL Technologies.

Confident about being on track for its USD 20 billion revenue target by 2020, Infosys said it expects 10-12 per cent revenue growth in constant currency terms in 2015-16.  Infosys expects revenue to grow by 7.2-9.2 per cent in USD terms, and 11.5-13.5 per cent in rupee terms, from the earlier guidance of 8.4-10.4 per cent and 6.2-8.2 per cent.  

Industry body Nasscom expects the Indian IT-BPM sector to grow 14-16 per cent in dollar terms for the fiscal.  “While Infosys is still early in its journey to become the leading next-generation services company, this gives a good momentum for the rest of the year,” Sikka said.  However, in US dollar terms, its consolidated net profit declined 1.3 per cent to USD 476 million in the first quarter of 2015-16, while revenue rose 5.7 per cent to USD 2.25 billion.

“We are operating within our stated margin band, balancing strategic investments and client focus with operational efficiencies,” Infosys CFO Rajiv Bansal said.  Pricing environment is competitive, which Infosys is addressing through automation and improvement in productivity, he added.

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