Sikka proves his mettle Infosys profit up

Bangalore: Infosys on Friday reported a net profit of Rs 3,096 crore in the September quarter, beating Street expectations. The company’s board approved an interim dividend of Rs 30 per share and a bonus issue of one equity share for every equity share held, leading to a sharp jump in stock prices.

The Q2 results are the first since Vishal Sikka took over as Infosys CEO on August 1. Dr Sikka, a former SAP top executive, is the first non-founder CEO of Infosys.

As of 10.10 a.m., Infosys shares traded 6.2 per cent higher at Rs 3,872, outperforming the broader Nifty, which traded 1% lower tracking global stocks. Infosys was the top gainer on the 50-share Nifty index.

Other IT stocks also jumped tracking gains in Infosys. HCL Tech traded 1.8% higher, while Tech Mahindra advanced 0.9%. Wipro and TCS also traded higher.

Brokers polled by NDTV had expected Infosys to report a net profit of Rs 2,959 crore in Q2, but the final number was around Rs 140 crore higher than expectations. Analysts said the jump in profits was on account of higher other income and is not an operational beat.

Sales were in line with estimates, rising to Rs 13,342 in the September quarter against expectations of Rs 13,318 crore.

Infosys, which has been lagging behind the IT industry, had reported a net profit of Rs 2,886 crore on sales of Rs 12,770 crore.

The company also managed to beat operating (ebit) margin estimates, which rose to 26.1% on the back of currency depreciation and cost cutting measures.

Infosys, which is one of the few corporates, to give a sales outlook, retained its dollar revenue guidance at 7-9%. In September quarter, dollar revenues rose to $2201, slightly higher than estimates of $2195 million.

Dr Sikka is likely to outline the company’s strategy at a press conference on Friday.

Pramod Gubbi of Ambit told a TV channel that Infosys Q2 results are better than estimates. “The margins have been better, but the focus in on the new line of stratgey that CEO Vishal Sikka will outline and how that strategy will be executed over the next couple of years,” he added.

Gubbi, however, said that there was not enough in Q2 results to justify the surge in stocks on Friday.