India’s Infosys raises sales guidance, but for the third-quarter profit misses estimate

FILE PHOTO: The logo of Infosys is depicted in the company’s headquarters in Bengaluru, India, April 13, 2017. REUTERS/Abhishek N. Chinnappa/File Photo

(Reuters) – Indian IT services company Infosys Ltd raised its full-year revenue growth forecast on Friday, but reported a larger than expected drop in third-quarter profit due to higher costs.

The country’s second largest software services exporter, with a market capitalisation reported a 29.6 percent drop in net profit for October-December-36.09 billion rupees ($511.94 million). That, in comparison with the 41.31 billion rupees average of 25 analyst estimates compiled by Refinitiv Eikon.

A year earlier, it made a profit of 51.29 billion rupees, helped by tax benefits of the company’s deal with the U.S. Internal Revenue Service, the company said in a statement here

Still, Infosys has the growth of the sales forecast for the year to March 2019 to 8.5-9 percent in constant currency, 6-8 percent previously.

The total costs in the quarter increased over 26 percent to 170.21 billion rupees, an additional depreciation charge of $12 million and a decrease of $65 million in the carrying amount of the Skava units.

The company also said that it is “no longer very likely” that the sale of the units Kallidus & Skava and Panaya would be completed by March 31, 2019.

Meanwhile, the income from operations in the quarter increased 20.3 percent to 214 billion rupees in what is usually considered a season of weak period for Indian IT companies.

Infosys also approved for the buy-back of shares up to the value of 82.60 billion rupees as part of the capital allocation policy.

On Thursday, market leader Tata Consultancy Services Ltd reported a record quarterly profit for October-December.

Reporting by Arnab Paul, and Krishna V kurup in Bengaluru; Editing by Jason Neely and Mark Potter

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