Beleagured IT bellwether Infosys seems to be getting back into the groove with iconic co-founder NR Narayana Murthy back at the helm, with a strong surge in sales and an emphasis on high-volume deals.
The software services giant beat market expectations on Friday with its better-than-expected year-on-year revenue growth of 31.5% to Rs. 12,965 crore in July-September against a year ago and raised its revenue growth outlook for the current fiscal (2013-14) to 9-10% from the earlier projection of 6-10%.
Net profit, however, grew by a muted 1.6% in the second quarter to Rs. 2,407 crore against a year ago as the company nursed costs incurred in higher wages. A weaker rupee was a help as earned dollars fetched more.
The results were the first for Infosys since Murthy came out of retirement on June 1 to be the executive chairman after two years of disappointing earnings that saw Infy lose ground to rivals such as TCS, HCL Tech and Cognizant.
Large deals and increased sales from “Big Data” deals that involve computer analytics and Internet-based cloud computing aided growth in the latest quarter.
The company raised its sales and marketing expenses during the quarter — an indication of its aggressiveness bring home more deals, as it hired 12,000 people to swell its headcount to 1,60,227 and acquired 168 new clients.
“This growth is a result of our focus on execution,” said SD Shibulal, CEO and MD Infosys.
Net profit in dollar terms was down 11%, primarily as the company set aside $35 million (Rs. 219 crore) towards an ongoing visa-abuse investigation in the US and higher investments on marketing.
“Till now Infosys has been sticking to its high-price modules but now they have learnt that in order to be competitive they have to reduce prices,” said Achen Jakher, CEO of US-based IT consultancy firm Svelte Systems.
Rise in revenue growth sent the company’s stock up 4.5% to Rs 3,274 on the BSE.