Infosys Q1 profit up 3.7%, maintains forecast at 6-10%

Infosys Ltd today posted a healthy topline growth, and beat some analysts' expectations by retaining its revenue growth forecast for the full year, a sign that India's second largest software services exporter was confident it could regain lost market share.

Infosys posted a 3.7 per cent year-on-year increase in its first-quarter net profit, matching estimates, after contract wins and foreign exchange gains boosted earnings.

Consolidated net profit for the quarter ended 30 June rose to Rs2,374 crore from Rs2,289 crore in the same year-ago period, the Bangalore-based company said.

Most analysts had expected Infosys to maintain its forecast for 6-10 per cent revenue growth for the current 2013-14 financial year, but Morgan Stanley raised doubts last week, saying the company would cut estimates to 4-6 per cent.

Investors cheered the forecast, coming after almost two years of disappointing results. Infosys shares were up nearly 15 per cent to their highest level in almost three months in morning trade on the Bombay Stock Exchange.

Infosys's revenue growth forecast still lags the 12-14 per cent growth outlook for the sector made by local IT industry body National Association of Software and Services Companies (Nasscom), highlighting the challenges facing the company's management.

Infosys brought back founder S Narayana Murthy as executive chairman on 1 June to revive the company, and his efforts may get a boost from forecasts that 2014 will see the strongest demand for technology from US government institutions and businesses since the 2008 global financial crisis (See: Struggling Infosys recalls Narayana Murthy from retirement).

Infosys also said its margins may be affected in future quarters due to previously announced compensation increases. In June, the company had said it would raise salaries for all eligible staff.