Infosys Profit Rises on Client Wins and a One-Time Tax Benefit

Infosys posted a 38 percent surge in third-quarter profit on a tax benefit and investments in digital technologies as its new CEO maintained forecasts for slowing sales growth.

Net income was 51.3 billion rupees ($806 million) in the three months ended December, compared with the 36.1 billion rupee average of estimates compiled by Bloomberg. The company booked a $225 million gain, part of a series of tax-provision reversals agreed upon with U.S. tax authorities. Sales rose just 3 percent in the quarter.

The earnings announcement is the first since Salil Parekh took over as chief executive officer last week after a boardroom tussle that ushered out Vishal Sikka. Asia’s second-largest software services company had been an investor favorite before a very public clash between its directors and several founders over corporate governance issues. Parekh’s pledged to keep steering Infosys away from a traditionally labor-intensive model.

Full-year revenue will rise 5.5 to 6.5 percent in constant currency terms, while in U.S. dollars growth is projected at 6.5 to 7.5 percent, a prediction that was cut last year after the boardroom upheaval. Sales in fiscal 2017 rose 9.7 percent.

“We are progressing towards stability and are well positioned to serve our clients in the new areas of demand,“ Parekh said in the earnings statement. India’s $154-billion IT services industry is investing heavily in cloud- and artificial intelligence-based services to jump-start growth, as clients in key segments such as banking and finance turn increasingly to automation.