After a series of disappointing quarters, IT bellwether Infosys finally delivered a positive surprise
, beating street expectations in the October-to-December quarter by a wide margin. Net profit during the quarter
fell a tad to Rs 2,369 crore, or Rs 41.47 a share, from Rs 2,372 crore, or Rs 41.51 per share, a year earlier. However, it was the top line in dollar terms that got the markets excited.
The company reported revenue of $1.9 billion
, rising 5.8 per cent from a year earlier and up 6.3 per cent sequentially. Infosys got a boost after it acquired Zurich-based consulting company Lodestone in September 2012, but did well even without it. While analysts were expecting revenue to grow about 1.5 per cent sequentially excluding Lodestone, Infosys delivered growth of 4.2 per cent during the quarter. The company said it expects
2012/13 revenue at $7.45 billion, up from $7.34 billion projected earlier. PERSPECTIVE:Infosys eyes lost mojo in Lodestone buy
Investors cheered, sending the stock up 16.2 per cent to Rs 2,696.50 at 2 p.m on the Bombay Stock Exchange. The benchmark Sensex was 0.3 per cent higher.
Analysts, who had moderate expectations from the company given a spate of poor performances previously, were quick to spot a turnaround.
"The results were much ahead of our expectations. Some of their clients have ramped up and the company has executed well, leading to strong organic revenue growth," says Sanjeev Hota, an analyst with brokerage house Sharekhan. 2013 OUTLOOK:Infy sees a better year ahead for IT industry
Organic revenue growth, analysts speculate, could be even ahead of Tata Consultancy Services's (TCS) top line growth this quarter. TCS, India's largest IT services exporter, has consistently outperformed Infosys over the past many quarters.
If revenue growth was a surprise, so was the pricing increase of 1.8 per cent that Infosys reported in a very volatile environment. MUST READ:Guidance reports hold vital clues for investors
"We don't know if the pricing growth is sustainable," says Dipen Shah, an analyst with Kotak Securities. "But we would like to see higher volume growth than reported this quarter (about two per cent) going ahead," he adds.
Ashish Chopra, IT analyst with brokerage Motilal Oswal, noted that the Infosys stock had been under-owned among investors on the back of a series of below-estimate numbers. "However, the current quarter performance will infuse confidence," he says.
Expect a re-rating of the stock.