Infosys reports 29 percent jump in second quarter net profit

Indian IT giant Infosys reported on October 10 a better-than-expected 29 percent jump in second-quarter net profit, helped by a strong US dollar and cost reductions, while it announced a bonus stock issue, sending its shares soaring. The country's second-largest IT services exporter said July-September net profit hit 30.96 billion rupees ($506 million), up from 24.07 billion rupees in the same period last year and ahead of forecasts of 29.6 billion rupees.
"Our efforts to bring in operational efficiencies yielded encouraging results during the quarter," Infosys chief operating officer U.B. Pravin Rao said. The news sent shares in the firm surging nearly seven percent, to 3,886.80 rupees, before they retreated to 3,860.
The company, whose earnings are mainly dollar-denominated as it derives around 75 percent of revenues from abroad, said it was giving shareholders one bonus share for each share held.
The earnings were bolstered by a fall in the Indian rupee against the US dollar. Indian software-makers have leveraged an ample talent pool and relatively low costs to win business in other countries.
The company, created by seven software professionals around a kitchen table in the 1980s, projected revenues would grow 6.7-8.7 percent in rupee terms during the full financial year to March 2015.
However, that is lower than industry-average projections of 13-15 percent revenue growth.
The company, second in terms of revenues behind India's biggest software maker Tata Consultancy, announced the figures under the leadership of new chief executive Vishal Sikka.
He is the first chief executive to head the company who is not from the core seven-founders group. Sikka said he was confident of transforming Infosys "into a next-generation service company" and posting "consistent profitable growth".
Analysts said the bonus share issue announced by Infosys reflected Sikka's confidence.
The company has shifted strategy to offer more value-added, sophisticated technologies as it chases higher-yielding contracts.
Infosys, once known as the "bellwether" of India's flagship outsourcing industry and billed as the country's equivalent of Microsoft, is listed in Mumbai and New York.
The company, the first Indian firm to be listed on the Nasdaq and which has around 160,000 employees, aims to become "the bellwether of the Indian IT industry again", Sikka told a news conference.