IT giant's shares go up by 11 percent
The first quarter of the current fiscal started on a promising note for India's second-largest IT firm Infosys Ltd. The Bengaluru-based company on Tuesday cheered the markets by posting a 4.5 percent sequential dollar-revenue growth, the highest in 15 quarters, sending the company's shares soaring by 11 percent. The announcement comes at a time when the IT firm's first non-founder CEO and managing director Vishal Sikka is scripting a recovery story of Infosys, which has lost its bellwether status over the last few years, and is now lagging behind peers.
After several quarters of sluggish growth, Infosys's June-quarter earnings, which are ahead of Street expectations, have set the right track for the company to achieve its full-year (FY16) revenue guidance of 10-12 percent growth over the previous fiscal in constant currency terms. Typically for companies with large foreign operations, constant currency growth is seen as an indicator of real growth. IT firms use this method to eliminate the effects of exchange rate fluctuations while calculating financial results.
During the April-June stretch, Infosys recorded revenues of $2.25 billion, up by 4.5 percent quarter-on-quarter, outperforming larger rival TCS's revenue growth of 3.5 percent during the same period. Analysts were expecting Infosys to post sequential dollar-revenue growth in the range of 2.6-3.5 percent for the first quarter of the current fiscal.
Mumbai-headquartered TCS posted business volume growth of 4.8 percent during the June quarter compared to Infosys's 5.4 percent, the highest in 19 quarters.
"We had a great quarter. We had the best revenue growth in the last 15 quarters and best volume growth in the last 19 quarters. I believe this is a result of the initiatives we have taken, given the organisational realignment that we made in delivery, sales and consulting services. All these initiatives have resulted in the success we have seen in large deal wins. This quarter saw the results of our deep operational focus as well as the widespread adoption of innovation and new technologies that are starting to show results now. Our performance has set a good momentum for rest of the year," said Sikka, CEO and managing director of Infosys.
During the April-June period, Infosys had a gross client addition of 79, including six large deals with a total contract value of $688 million.
"We are confident of achieving our guidance of 10-12 percent in constant currency for FY16. However, we are still early in achieving our target of becoming a next-generation services company. This quarter gives us reason to be confident," Sikka added.