Infosys Q1 Profit Tops Estimates, Backs Full Year Revenue View

(RTTNews) - Indian software exporter Infosys Technologies Ltd (INFY), which re-appointed co-founder and former chairman NR Narayana Murthy as executive chairman of the board last month, reported Friday a marginal rise in first-quarter profit, benefiting from higher revenues and lower income tax expense.

The earnings matched Wall Street expectations, while the revenue topped estimates. The company also backed its full year revenue forecast. The stock is surging nearly 11 percent on the Bombay Stock Exchange.

S. D. Shibulal, CEO and Managing Director, said, "Despite facing an uncertain macro environment, changing regulatory regime and a volatile currency environment, we have done well in Q1 and are cautiously optimistic about rest of the year."

Profit attributable to owners of the company rose to $418 million from $416 million in the prior year, but fell close to 6 percent from the preceding quarter.

The earnings per American Depositary Share were flat with last year at $0.73. On average, 11 analysts polled by Thomson Reuters expected earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude special items.

The results are consolidated under the International Financial Reporting Standards or IFRS.

Revenues for the quarter increased 13.6 percent to $1.991 billion from $1.752 billion and were 2.7 percent higher from the prior quarter. Analysts had expected revenues of $1.93 billion.

In Indian rupee terms, net profit increased to 23.74 billion rupees from 22.89 billion rupees and revenues climbed 17.2 percent to 112.67 billion rupees.

Income tax expense for the first quarter was lower at $153 million compared to $160 million last year.

Infosys and its subsidiaries added 66 clients during the quarter and the net employee addition was 575.

The company said it maintained its margins and continued to make investments in the business.

A major portion of the company's revenue is generated in the U.S. Infosys competes with Tata Consultancy Services Ltd., Wipro Ltd. (WIT) and Accenture Plc (ACN).

The financial crisis and the resultant caution exercised by companies by way of project delays and cancellations have been posing a threat to revenue growth at most software service firms.

On June 2, Infosys re-appointed Narayana Murthy as executive chairman of the board and additional director, with immediate effect. The company, which has been grappling with lackluster growth in revenue and profits, said the appointment was in response to shareholder demands.

Looking ahead, the company still expects revenues to grow 6 to 10 percent for the fiscal year ending March 31, 2014. Wall Street expects revenues of $7.96 billion for the year.

Infosys said it has increased compensation for fiscal 2014, effective July, which would affect its margins in the future quarters.

INFY closed up 3.4 percent on Thursday at $44.04.

On the Bombay Stock Exchange, the stock is currently climbing 10.67 percent at 2,796.35 rupee.