Infosys Raises Full-Year Sales Forecast After Contract Wins

Updated on

Infosys Ltd. raised its full-year sales growth forecast as India’s second-largest outsourcing company won more information technology contracts. Shares surged the most in 2 1/2 years.

Sales in the 12 months started April 1 will climb 7.2 percent to 9.2 percent in U.S. dollar terms, Infosys said Tuesday. That compares with an April forecast for growth of 6.2 percent to 8.2 percent.

Infosys is sharpening its sales focus, boosting effectiveness by mining existing customers for more business to help it significantly improve “win percentages,” Chief Executive Officer Vishal Sikka told investors last month. The purchase of two U.S.-based companies to add new technology capabilities also aided in boosting revenue at the Bengaluru-based software provider.

“The revenue growth is definitely ahead of my estimates,” Girish Pai, an analyst with Nirmal Bang Institutional Equities in Mumbai, said by phone. “It could lead to a situation where Infosys delivers industry-leading growth, but it’s difficult to say a trend is going to emerge.”

First-quarter net income increased 5 percent to 30.3 billion rupees ($476 million) in the three months ended June, matching the median of analysts’ estimates. Sales rose 12 percent to 143.5 billion rupees, beating analysts’ estimates for 140.7 billion rupees.

Shares climbed 11 percent, the biggest jump since January 2013, to 1,112.65 rupees at the close in Mumbai trading. The stock was the best performer on the benchmark S&P BSE Sensex Index, which declined 0.8 percent. Larger competitor Tata Consultancy Services Ltd. fell 0.7 percent.

‘Good Momentum’

The rupee’s 5.4 percent drop against the dollar in the 12 months through June also boosted revenue as the company gets more than half its sales from clients in North America.

The company’s adoption of innovation is “starting to bear fruit in large deal wins and in the growth of large clients,” Sikka said in the statement. “This gives us good momentum for the rest of the year.”

Infosys, which added 79 clients last quarter, won contracts from companies including U.K. department store chain House of Fraser and Sharjah Islamic Bank, based in the United Arab Emirates. The software provider said it won six deals each worth more than $50 million in total contract value.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE