Infosys Q2 Profit Up, Cuts Revenue Outlook
Infosys Ltd <INFY.NS>, India's No.2 software services exporter, reported a 9.7-percent rise in quarterly profit and cut its full-year revenue outlook by less-than-expected, cheering investors who shrugged off its warning about global economic uncertainty.
Kicking off results for India's nearly $76 billion IT sector, shares in Infosys rose 6 percent on Wednesday to their highest level in more than two months, outperforming the broader market <.NSEI>.
The company, which counts Goldman Sachs <GS.N>, BT Group <BT.L> and BP <BP.L> among its main clients, trimmed its dollar revenue growth forecast to 17.1 percent to 19.1 percent for the fiscal year, from 18 percent to 20 percent projected earlier.
He said analysts had expected Infosys to slash its dollar revenue outlook by 4 to 5 percentage points.
By 0500 GMT, Infosys shares were trading at 2,646 rupees a share, up 5.7 percent.
Infosys Chief Financial Officer V. Balakrishnan said the reduction in forecast was mainly due to currency volatility.
India's IT sector, which feeds off increased outsourcing by companies looking to cut costs, is expected to face pricing pressure and a decline in new orders as Europe struggles with a debt crisis and the United States sees an economic slowdown.
Infosys and domestic rivals Tata Consultancy Services <TCS.NS> and Wipro <WIPR.NS> <WIT.N> also face stiff competition from global players including IBM <IBM.N> and Accenture <ACN.N> for large outsourcing deals.
More than half of Bangalore-based Infosys' revenue is generated in the United States. Europe is its second largest market, accounting for 20.5 percent of its revenue in the second quarter, down from 21.8 percent a year ago.
"The global macroeconomic environment is still uncertain. It is and should be a concern for the IT industry," S.D. Shibulal, chief executive officer of Infosys, said in a statement.
Nasdaq-listed Infosys <INFY.O> said consolidated net profit rose to 19.06 billion rupees ($387 million) for the fiscal second quarter ended September 30, from 17.37 billion rupees reported a year ago, as a weaker rupee boosted results.
Revenue rose 16.6 percent to 81 billion rupees as the company added 45 clients in the quarter.
A Reuters poll of brokerages had forecast a profit of 18.9 billion rupees on revenue of 81.2 billion rupees for the company.
"The results have been helped partly by the depreciation in the rupee. The main thing to watch out for will be how the U.S. and Europe will move in the coming months," said R.K. Gupta, Managing Director at Taurus Asset Management.
"But Indian IT companies and Infosys in particular have a cost advantage over their global peers. I am not very pessimistic on these companies," he said.
Infosys, worth about $29 billion, has lost more than a quarter of its market value this year, roughly in line with a 25 percent fall in the sector index <.CNXIT>, but outperforming a 19 percent decline in the Mumbai market index.
The company expects its dollar revenue to rise to $7.08 billion to $7.2 billion in the fiscal year ending March 2012.
($1 = 49.3 rupees)
(Editing by Jui Chakravorty, Anshuman Daga and Alex Richardson)