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Infosys Q2 profit up, shares surge
October 11, 2013 , 2 : 41 pm GST
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In this file photograph taken on April 14, 2005, an Indian security guard stands at an entrance gate of India software giant Infosys Technologies in Bangalore. Photo - AFP/Dibyangshu SARKAR/Files
Indian outsourcing giant Infosys reported Friday a lower-than-expected 1.6 percent rise in quarterly net profit but raised its full-year revenue outlook, driving its shares up more than five percent.
Second-quarter net profit rose to 24.07 billion rupees ($383 million) for the three months to September from 23.69 billion rupees a year earlier.
Analysts had expected a net profit of 25.78 billion rupees, according to Dow Jones Newswires, and the lower result was due to a $35-million provision for visa-related costs.
Friday's results, which kicked off India's quarterly earnings season, were the first for a full quarter since Infosys in June reappointed its founder Narayana Murthy as executive chairman, after he retired two years ago aged 65.
Murthy's return comes as the firm struggles with falling market share to rivals such as Tata Consultancy Services and HCL.
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 that 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".
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.
Revenues climbed to 129.65 billion rupees in June-September from 98.58 billion rupees in the same period last year.
"During the quarter we witnessed broad-based volume growth, robust client additions, five large deal wins and increased sales momentum of our big data and cloud offerings," said CEO and Managing Director S.D. Shibulal.
He warned that the US government shutdown could affect sales in the third quarter.
The company said revenue was expected to grow 9-10 percent in dollar terms for the fiscal year to March 2014, a change from its earlier outlook of 6-10 percent.
Ankita Somani, analyst at Angel Broking, said the revenue guidance "seems to be conservative" and that Infosys could achieve 10.5 percent growth even if revenues are flat in coming quarters.
Revenues climbed to 129.65 billion rupees in the June to September quarter from 98.58 billion rupees in the same period last year.
Infosys was trading up 5.37 percent in morning trade on the Bombay Stock Exchange. By early afternoon, its shares were 4.38 percent higher at 3,261.00 rupees.
Many of India's IT outsourcing firms reported sluggish growth last year but the outlook for the industry has started to improve in the key United States and European markets.
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