Infosys reports stronger than expected Q1 numbers

infosys_profit-635Indian IT outsourcer Infosys on Friday reported a 3.7 percent rise in quarterly net profit, matching estimates, on contract wins and foreign exchange gains, sending shares surging nearly 15 percent.

Consolidated first quarter net profit for the Nasdaq-listed company rose to 23.74 billion rupees ($396 million) for the three months to June from 22.89 billion rupees a year earlier, it said.

The company said it was also retaining its outlook for annual revenues, which along with the improved earnings data, saw shares rise as much as 14.96 percent to a high of 2,905.0 rupees in early trade.

Analysts had expected Infosys to report profit of 23.5 billion rupees, after it last month reappointed its founder Narayana Murthy as executive chairman, who retired two years ago aged 65.

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.

India’s second-largest outsourcer by revenues said it retained its revenue outlook in the fiscal year to March 2014 to grow by 6.0-10.0 percent.

“Despite facing an uncertain macro environment, changing regulatory regime and a volatile currency environment, we have done well in Q1 and are cautiously optimistic about (the) rest of the year,” said Infosys chief executive S. D. Shibulal in a statement.

Murthy’s return comes at a time when the company is 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.

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 markets of United States and Europe.