Infosys Q3 net profit rises to Rs 2,875 crore, beats Street

Infosys on Friday posted better-than-expected net profit of Rs 2,875 crore on sales of Rs 13,026 crore for the October to December quarter. India's second biggest outsourcer also upped its annual sales outlook, a sign that outsourcing demand is improving in key markets like the US and Europe.

Infosys said it will grow at 11.5 to 12 per cent during 2013-14 versus its earlier estimate of 9-10 per cent. Analysts had estimated the company to raise guidance to 10-12 per cent.

Infosys said dollar revenues rose to $2100 million in the third quarter, up 1.64 per cent from $ 2066 million in the previous quarter. Brokers polled by NDTV had expected the company to clock $2109 million in the December quarter.

Ebit or operating margins rose to 25 per cent against 23.5 per cent in the previous quarter because of initiatives to bring more efficiencies into operations, Rajiv Bansal, chief financial officer of Infosys said.

Infosys shares ended with nearly 3 per cent gains on Friday.  Infosys earnings had a positive rub-off on other tech stocks, with the broader IT benchmark on the BSE rising over 2 per cent as against a 0.2 per cent gain in the BSE Sensex.

Gautam Chhaochharia of UBS said Infosys sales are marginally below estimates, but margins have surprised positively. Cost reduction is having bigger impact on margins in our view, he added. (Watch the interview)

Sanjeev Hota of Sharekhan said Infosys has met expectations on most of the counts and the management is sounding confident after 4-5 quarters. (Watch: Infosys has met expectations on most of the counts says Sanjeev Hota)

"The positive commentary is an important aspect of the earnings," he added.

Infosys chief executive SD Shibulal said, "We believe the global economic environment has improved and our clients are gaining confidence to invest in their strategic initiatives."

Infosys has focused on winning large IT outsourcing contracts since the return of its founder Narayana Murthy in June 2013. The company has cut costs aggressively, but at the same time given wage hikes to employees. Analysts said the strategy seems to be working for the company.

Everbody is betting on Mr Murthy, Mr Hota said.

Infosys has witnessed eight big exits in the last six months and many analysts have linked the resignations to the battle for the chief executive's chair. (Read the full story here)

Current incumbent SD Shibulal retires in 2015 after which Infosys is likely to get a non-founder boss for the first time.

In an answer to a question, Mr Shibulal said Infosys not losing market share due to senior level exits.