BANGALORE, INDIA: Under-promising and over-delivering is not something new to Infosys. Only that the last few quarters have flattered to deceive the Indian software giant.
But, Q3 FY2013 might just be the turnaround the company is looking for, ever since chief executive officer and managing director S.D. Shibulal took over the reins of the company from his predecessor Kris S. Gopalakrishnan. And, that means nearly one-and-a-half years, from August 2011.
In the recently-concluded October-December third quarter (Q3 FY2013), its QoQ revenue growth in rupee terms has gone up by 5.7 per cent, and its YoY growth was 12.1 per cent, beating estimates.
It grossed revenues of Rs. 10,424 crore, as against Rs. 9,298 crore during the same period last year. The net profit, however, was flat compared to last quarter, when it was actually expected to be lower.
It is pertinent to note here that its acquisition of Spanish consulting firm, which was announced last September, has helped the company to post better growth. If Lodestone is taken out of the equation, the QoQ growth of Infosys stands at 3.6 per cent and its YoY growth at 9.8 per cent.
At the Q3 results announcement on Friday, Shibulal said that they have completed the acquisition in December.
He also added that while pricing had been stable, they had faced headwinds in the U.S. in the middle of the last quarter, predominantly due to Hurricane Sandy, which battered the east coast of the country and affected about two weeks of the company's work at its client bases.
"We still performed well because of the execution of our strategy over the last 2-3 quarters and our employees worked extremely hard during tough times," explained Shibulal. He, however, admitted that they continued to be cautiously optimistic about the fourth quarter.
If the performance was one, what else surprised industry experts was that it raised its sales forecast for the financial year FY2013 to a minimum of $7.45 billion, including $104 million in additional revenue following its acquisition of Switzerland-based consultancy firm, Lodestone Holdings. It adds up to about 1.6 per cent increase from its earlier guidance.
On Infy's results, Partha Iyengar, country manager - Research, Gartner India, observed, "Infosys results are finally coming closer to reflecting the demand reality, and if this sustains for the next two quarters, (it) could indicate that the worst phase of the company is behind it and it can stand to benefit from the strengthening demand environment.
"The upping of full year guidance is also a good sign for the company, which shows some semblance of a return to confidence for the company, which was quickly becoming a 'negative outlier' amongst the Indian services majors."
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Dipen Shah, head of Private Client Group - Research, Kotak Securities, said, "Infosys's 3Q results were above expectations. The organic revenue growth beat the guidance given by the company earlier. Margins were marginally lower as against our expectations, though."
He also added that with greater stability expected in the US and European economies, the velocity of decision-making by clients might increase, which would be positive for Indian vendors. "We also gain comfort from the (Infosys) management's indication that, there is a strong pipeline which Infosys has."
The company's organic growth guidance of 5.1 per cent in Q4 versus their estimate of 3.5 per cent is a positive surprise, according to Ashish Chopra, IT analyst at Motilal Oswal Securities, who added that the current quarter performance will infuse confidence among investors.