The Bangalore-based company said its net profit rose to 10.91 billion rupees ($271 million) in the July-September period from 9.18 billion rupees in the same quarter a year ago.
Revenue, or total income from software services, rose 19 percent to 41.1 billion rupees ($1.02 billion), helped by the addition of 48 new clients, including Royal Philips Electronics NV, which placed a $250 million (180 million euros) order with Infosys in July to handle backoffice work relating to finance and administration.
Infosys, India's second-largest software exporter by revenue after Tata Consultancy Services Ltd., did better than its own guidance for the July-September period, but its stock fell sharply in trading Thursday as its revised earnings forecast for coming quarters disappointed investors.
The company, which is also listed on the Nasdaq, now estimates its annual earnings per share to rise up to $1.99 in the fiscal year ending March 2008 compared with its earlier guidance of a maximum annual EPS of $1.94.
"The net profit growth is almost in line with expectations, but we were expecting the company to revise its earnings a little more aggressively for the full fiscal year," said Trideep Bhattacharya, who heads Asia technology research at UBS Securities.
Infosys stock fell 7 percent to 1,976 rupees Thursday. The stock had risen sharply through past week.
On the positive side, the company surprised analysts by reporting a rise in its operating margin to 27.5 percent from 24.7 percent in the preceding April-June quarter.
The company said higher billing rates, better use of staff and hedging helped.
Infosys, which writes software for companies like Goldman Sachs and JC Penney, said it was charging its clients 1.9 percent more than it did last year.
"Our operating margin improved despite the appreciating rupee," said V. Balakrishnan, Chief Financial Officer, said in a statement.
The rupee has risen more than 10 percent against the U.S. dollar this year. The sharp appreciation has hurt firms like Infosys that routinely get orders from Western companies to handle their software development, back-office operations and other work such as managing their information technology infrastructure.
"We are proactively hedging our currency exposure to mitigate this impact," Balakrishnan said, adding the company has bought forward cover worth $1.4 billion.
The company said it added 4,530 new employees in the latest quarter, taking total staff to 80,500.
The figures released by Nasdaq-listed Infosys are based on U.S. accounting standards. The company also released slightly different set of figures based on Indian accounting standards.
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