Indian IT giant Infosys reported a consensus-beating 13% increase in its third-quarter profits, but even better guidance may not be enough to keep pushing the stock higher.
INFY (quote) logged a 17.4 billion rupee ($394 million) profit in the third quarter, beating estimates by about 3%.
As a bonus, the company authorized a special dividend of $0.67 a share (or ADR), which is both a nice bonus for shareholders and proof that global IT markets have recovered enormously after the 2008-9 credit crash.
Going forward, INFY notes that corporate clients are still boosting their IT spending but budgets still have a long way to go before the company’s business is back at its peak. In all, management expects revenue for the full year to come in around $190 million better than it expected three months ago, boosting its profit targets as much as 6 cents per share.
However, as the rupee gets stronger against the currencies in which INFY gets paid — dollars, pounds sterling and euros, primarily — even if future results are fantastic, unfavorable exchange rates may reduce their real value to India-based investors.
The rupee is up over 5% on the dollar in the last month, making it the best-performing currency in Asia while digging about 1.5 percentage points out of INFY margins.
As for INFY, the stock is up a solid 29% so far this year. That is an enormous run and it may be time to take some profits.