Boost in revenue and share growth for Infosys

By Nicole Miskelly | 22 July 2015

India’s second-largest IT services company, Infosys, reported a 10 per cent growth in shares this week after unexpected sales boosted the company’s full-year revenue guidance and they experienced better than expected first quarter results.

The firm reported a 7 per cent sequential growth in revenue increase for the quarter ending in June, which is the highest in the past 15 quarters and according to chief executive, Vishal Sikka, success in gaining major new IT contracts meant Infosys would increase revenues up between 7.2 per cent and 9.2 per cent during this financial year, which is an increase of 1 per cent compared to previous estimates, the FT reports.

Infosys reported a net profit of $455m in the three months leading up to June which is a figure up 5 per cent year on year. The results include six major contracts the company won this year which are worth over $50m.

During a post-earnings press conference on Tuesday, Sikka said: “We had a great quarter. We are still early in our journey towards becoming a next-generation services company. However, this quarter gives us something to smile about and good reason to be confident."

After a tough year of unpredictable financial performance since hiring Sikka, the boost has since raised hopes that the chief executive’s ‘renew and new’ strategy is starting to pay off.

According to reports, since taking over as CEO in August last year, Sikka, who previously held a member position on the executive board of SAP AG, has said that he wants Infosys to become a “next-generation services company” and has since set about strengthening the top management team by hiring a number of former high-profile SAP colleagues, carrying out a huge internal overhaul, executed large acquisitions and invested in innovative start-ups.

Sikka has said he plans to build up businesses involving more cutting-edge technologies in the areas of software automation and cloud computing, which was evident earlier this year when Infoysys purchased US tech group Panaya  for $200m, the FT reports.

Shares in Infosys have risen by over a third this year and although analysts and industry experts say Sikka’s new approach and plans to get more out of customers and win more big clients, will take years to show real results, Nilesh Shah, managing director at Kotak Mahindra Asset Management told CNBC India that, “After a long time we are seeing Infosys delivering ahead of what they had promised.”

 

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