Infosys Q1 profit down, forecasts FY14 revenue growth

Infosys Q1 profit down, forecasts FY14 revenue growth

Summary: Infosys' profit has shrunk for the second quarter in a row but the Indian outsourcing vendor says it's "cautiously optimistic" about future revenue growth, prompting one analyst to declare "the worst is over".

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TOPICS: Outsourcing, India
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Infosys profit has shrunk for the second quarter in a row, dropping by 5.9 percent in the three months ending June 30, 2013, over the previous quarter.

According to the Indian outsourcing services provider's first-quarter financial results, net profit clocked at US$418 million and was just 0.5 percent higher than the same quarter last year.

Its profit remained static over the year despite revenue growing by 13.6 percent year-on-year to US$1.99 billion. Compared to the previous quarter, revenue grew 2.7 percent. For the financial year ending March 31, 2014, the company forecast revenues to grow by 6 to 10 percent.

In fourth-quarter 2013, Infosys increased revenue by 9.4 percent to US$1.9 billion income, but saw profit decline by 4.1 percent over the same period to US$444 million.

The outlook defied some negative analyst expectations, driving up the company's share price, according to Reuters. As at Jul 12, 2013, 11:13 am IST, its shares were up 11.14 percent to US$46.80 (2,810 rupees).

Infosys CEO S.D. Shibulal was cautiously optimistic about the rest of the year, amid CFO Rajiv Bansal's warning that wage increases would eat into margins in future quarters.

The worst was over for Infosys, according to Phani Sekhar, fund manager at Mumbai-based Angel Broking, which holds shares in Infosys. "It remains to be seen how quickly they can recover from here," Sekhar told Reuters.

Infosys issued two sets of financial results, one in US dollars and the other in Indian rupees (INR), which generated a different set of numbers. The report in INR stated revenue for the first quarter was 112 billion rupees (US$1.86 billion), which was 17.2 percent higher than the previous year. Over the same period, profit grew by 3.7 percent to 23 billion rupees (US$383 million). 

"Despite facing an uncertain macro environment, changing regulatory regime and a volatile currency environment, we have done well in the first quarter and are cautiously optimistic about rest of the year," Shibulal, who is also Infosys' managing director, said in the earnings report.

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Topics: Outsourcing, India

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