Infosys hits record after sales outlook buoys outsourcers

Mumbai / Bloomberg

Infosys Ltd. surged the most in nine months to a record in Mumbai after forecasting better-than expected sales growth, as India’s second largest software exporter captures new contracts for information technology services.
Shares climbed as much as 8.1 percent to a lifetime high of 1,267.90 rupees as of 10.42 a.m., marking its biggest gain since July 21. Infosys last week said it expects sales to rise between 11.8 percent and 13.8 percent in U.S. dollar terms for the 12 months ending March, beating analyst estimates.
As the first of India’s tech giants to post earnings, Infosys is regarded as a bellwether for the country’s outsourcing industry. Its results helped lift shares of Wipro Ltd. and HCL Technologies Ltd. Monday. Chief Executive Officer Vishal Sikka has spent on artificial intelligence, added new contracts and worked to retain staff to help withstand flattening growth in global IT spending.
“Their client interactions have increased and their ability to bring in deals in traditional service streams has also improved,” said Sudin Apte, Chief Executive and Research Director at Pune-based Offshore Insights. “It is too early to say the tide has turned but clearly they have made good progress.”
Infosys’ US-traded shares rose the most in almost nine months, increasing as much as 11 percent to $20.47. Markets in India were closed Friday for a public holiday.
The company also reported fourth-quarter earnings, with net income rising 16 percent to 36 billion rupees ($540 million) in the three months ended March, the company said. That compares with the 35.2 billion rupee average of estimates compiled by Bloomberg. Sales in the quarter climbed 23 percent to 165.5 billion rupees compared with analyst projections for 164.8 billion rupees.
Global spending on IT has stalled, with Gartner Inc. last week cutting its forecast for this year to $3.49 trillion, which is 0.5 percent below 2015. But Infosys touted several major contract wins in the current quarter, including a deal with food packaging company ConAgra Foods Inc.
“The momentum of large deal wins continued this quarter and bookings were strong,” Chief Operating Officer U B Pravin Rao said in the statement.