Shares in Infosys Technologies soared after it revealed first-quarter growth that was impressive even by Indian offshore market standards. While it had been expected that the Indian stock markets would experience a marked downturn following the recent bombings in Mumbai, Infosys’s shares rose 7.5%, and it also dragged its competitors up with it.
The Bangalore-based company kicked off earnings season with sales of $660 million for the three months to the end of June, which represents a blistering 38.7% revenue growth rate on the year-ago period, well ahead of guidance it gave in April of $628 million to $633 million.
Net income increased 42.6% to $177 million, and its earnings per American Depositary Share (ADS) increased to $0.63, from $0.45 a year ago, and above its guidance of up to $0.57.
As a result, India’s second largest IT company upped its guidance. For the full fiscal year, it said it now expects sales of between $2.91 billion and $2.92 billion, compared to its previously given guidance of up to $2.8 billion, with earnings per ADS of up to $2.73, compared to $2.61. For its second quarter it expects sales to come in between $710 million and $715 million, with earnings per ADS of up to $0.65.
Infosys’ first-quarter’s numbers were boosted by the depreciation of the Indian rupee, but V Balakrishnan, who took over as CFO in May, told Computer Business Review that, even without the effects of the rupee, the company made sequential revenue growth of 11.3%.
Mr Balakrishnan said that, for the first time, Infosys has customers spending more than $100 million a year. He would not name them, citing client confidentially, but said that one was a US bank and the other was a large European telecommunications operator.
Infosys’ European customers now account for 26.2% of sales, compared to 23.9% a year ago, and Mr Balakrishnan said the growth was down to the offshore market’s relative immaturity there as compared to the US.
Overall, with such high levels of organic growth still evidently achievable, Infosys is not on the lookout for any large acquisitions, but Mr Balakrishnan confirmed that it would look at opportunities in the $100 million to $200 million price range.
Its BPO subsidiary, Progeon, continues to grow rapidly, though from a low base. It made $28 million in revenue, which was sequentially 16% more than the previous quarter. Infosys has long maintained that it would make acquisitions to gain scale in this business, and the company has confirmed that this is still the plan.
However, Infosys’ figures pumped new optimism into the market that its rivals could also achieve guidance-busting numbers. Shares in India’s largest IT company Tata Consultancy Services soared 6.8%, while Wipro and Satyam both increased by over 4%.