iGate beats estimates; sales up 3.6% from June quarter

BANGALORE: Nasdaq-listed iGate Corporation said that sales in September quarter expanded by 3.6% and net income by nearly double that rate. The company reported a net income of $32 million on revenues of $ 293.4 million, while analysts were expecting sales to grow by about 2%.

“I am pleased with our ability to accelerate revenue growth both sequentially and year-over-year. I am also happy with the quality of deals we are winning that are longer-term in nature with focus on innovation and productivity gains to our customers,” said Ashok Vemuri, iGate’s recently appointed president and CEO.

Vemuri joined iGate from Infosys last month after Phaneesh Murthy was sacked by the board for not disclosing a relationship with a subordinate employee.

“Our operational efficiencies coupled with a positive gain out of the rupee depreciating against the dollar resulted in an expansion of our margins and earnings,” said Sujit Sircar, CFO. “The forex tailwinds seem to have settled down with the rupee gaining marginal stability over the past couple of weeks.”

The company generated $86 million of operating cash during the quarter. Shares of the company have gained over 70% during the third quarter after investors were cheered by some large project wins and the company showed no visible disruption in business even after the Murthy’s exit. A class action suit against the company was also dismissed by a US court.

The analysts also said the company may reinvest some of margin benefits in hiring more US locals, especially as new immigration laws in that country makes it difficult to send engineers from India.

The company added eight new customers, two of which were Fortune 1000 companies. It signed multi-year deals with a US bank, a European finance and insurance firm, a US-based property & casualty insurer and a back office contract with a US medical devices firm, it said in a statement.