IT major Infosys, on Friday, reported a 3.7 per cent increase in net profit for the first quarter ended June 30, 2013, as compared to the same quarter year-ago and a 0.8 per cent decline on a sequential basis.
The positive figure, which comes after several consecutive gloomy quarters and guidance lagging industry outlook, sent the company’s stock up by nearly 15 per cent. The stock closed 10.9 per cent higher, recording a three-month high on the BSE for the beleaguered software services exporter .
The announcements defied analysts’ expectations , which had predicted that the company would cut its guidance from 6-10 to 4-6 per cent. Infosys did not revise its guidance in rupee terms; however, its dollar guidance is up to 13-17 per cent.
Infosys reported a net profit of Rs. 2,374 crore. Rupee-denominated revenues of Rs. 11,267 crore were up by 17.2 per cent compared to the year-ago quarter last year. Though the buoyant figures are partly attributable to the sliding rupee against the dollar – the rupee has seen an intra-quarter decline of about 12.4 per cent— revenue and net profit have also grown in dollar terms by 13.6 per cent and 0.5 per cent, respectively.
Chief Executive Officer and Managing Director S.D. Shibulal said that the company was “pleased”, but chose to remain “cautiously optimistic about the future”.
“Margins are flat, and our discretionary spend remains high at about 34 per cent, far above that of the rest of the industry. So, one quarter cannot be seen as a secular trend. We have seen a lot of volatility in the past – so we remain cautiously optimistic.”
He also spoke of regulatory hurdles ahead in the U.S., Canada and Australia, where imminent changes in visa rules could create fresh challenges. “We are watching this very carefully, and at this point all we can do is plan for it,” he said.
Operating margins, he said, remained flat, attributing it partially to the wage hikes effected across-the-board last month.
The company announced that it added 66 new clients over this period. Taking queries on changing strategies in the wake of the return of founder N.R. Narayana Murthy , Mr. Shibulal said that Infosys would “definitely be more aggressive in going after growth, and after large deals.”
“The large outsourcing deals are price-sensitive, and may be margin dilutive. But we are working to ensure they are margin-neutral in the long-GreGterm.”
At a time when cuts in discretionary spending have impacted the consulting business, Infosys has seen a growth in its consulting and systems integration portfolio from 30.7 to 33.6 per cent, compared to the year-ago quarter.
When asked if its Lodestone acquisition, made last September, had helped the company report good results, Mr. Shibulal said that the growth “has been overall.”
This is the first quarterly result announced after company founder N.R. Narayana Murthy returned from his two-year retirement to an executive role at Infosys last month.