India's Infosys Q1 profit up, shares surge

Indian IT outsourcing giant Infosys reported on Friday a nearly four percent rise in quarterly net profit and kept its market forecast intact, driving the firm's shares up 15 percent. Infosys, whose earnings are seen as a sector bellwether, said net profit rose 3.7 percent to 23.74 billion rupees ($396 million) for the first quarter to June, from 22.89 billion rupees a year earlier -- in line with market forecasts. Despite "an uncertain macro environment, changing regulatory regime and a volatile currency environment, we have done well in the first quarter", said Infosys chief executive S. D. Shibulal. Infosys, the country's second-biggest software services exporter, is "cautiously optimistic about (the) rest of the year," Shibulal said. The Nasdaq-listed firm's earnings were driven by contract wins and foreign exchange gains, a company statement said. Shares climbed 15 percent to a high of 2,905.0 rupees in early trade on the earnings and an announcement that Infosys was sticking by its 6.0-10 percent revenue growth projection for the fiscal year to March 2014. By 0600 GMT the firm was trading at 2,820.75 rupees, still up 11.64 percent on the back of the results. "The earnings are positive as was the stable revenue outlook," said Ankita Somani, analyst with Mumbai's Angel Broking. Infosys last month recalled company founder Narayana Murthy, who had retired two years ago at the age of 65, to serve as executive chairman in a bid to revive the company's fortunes. Murthy's return comes at a time when the company has been struggling with weak earnings and falling market share to rivals such as Tata Consultancy Services and HCL. The Bangalore-based Infosys is seeking to reinvent itself with a strategic overhaul to focus on higher value software and consulting services instead of labour-intensive outsourcing services. The company has seen a major reshuffle of its top management over the past two years, including the exit of several of its founders. Three decades ago, Murthy, who has an iconic stature in Indian business as a pioneer of the country's flagship outsourcing industry, sat around a kitchen table with six others and created Infosys. Last month, Murthy told shareholders after he was called back the task to rebuild a "desirable" Infosys could take at least 36 months and tough decisions would have to be taken which would result in "pain". Murthy called his "second innings" at the helm of the company something that he had not imagined in his "wildest dreams". The firm added 66 clients and a net 575 employees in the three months to June. Revenues for the quarter rose 17.2 percent to 112.67 billion rupees, said the company, whose results kicked off India's quarterly earnings season. Many of India's IT outsourcing firms have been going through a rough stretch and they say the outlook for the industry remains difficult due to uncertainty in its key US and European markets.