Infosys quarterly profit to rise 25%

Infosys, India's second-ranked software services provider, is likely to report a 25 per cent increase in quarterly profit on Friday, as European firms come under pressure to shift more backroom functions offshore to keep their costs in check.

The information technology bellwether caught analysts on the hop in July when it cut its annual sales forecast more deeply than expected - as global economic uncertainty hit tech spending - but its shares have risen by a fifth since its lows that month, beating gains of 13 percent on the benchmark Sensex stock index and nearly 9 percent by market leader Tata Consultancy Services.

July-September net profit is forecast at 23.8 billion rupees ($448 million), according to Thomson Reuters data. Profit in the previous quarter grew 33 percent from a year earlier.

The recent stock rally has come as investors see some signs of stability for the global economy and hope for an uptick in demand, though the International Monetary Fund this week warned that the United States and Europe could slide back unless they resolved their debt troubles. IMF head Christine Lagarde has blamed Europe and the U.S. - the mainstays of India's $100 billion software and services outsourcing industry - for companies putting off investment and hiring.

LODESTONE LIFT

Analysts predict Infosys, which has a market value of around $26 billion, will revise its revenue growth estimate to around 6 percent for the year to end-March, boosted by its acquisition last month of Swiss consultancy Lodestone. In July, the company cut that forecast to 5 percent from its April estimate for 8-10 percent growth. Excluding Lodestone, Infosys' legacy business is expected to have grown slightly less than that 5 percent estimate.

While Infosys isn't expected to provide a very strong guidance number, they may signal they're willing to be more proactive with their cash, said P. Phani Sekhar, a fund manager at Angel Broking in Mumbai, which owns Infosys stock. They may say they aren't averse to more such acquisitions.

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