(Reuters) - IT services provider Cognizant Technology Solutions Corp CTSH.O said it expects a pipeline of new projects from its healthcare and financial services clients to fuel growth for the remainder of the year, after a weak first quarter.
The company’s shares rose as much as 3.8 percent.
Like its Indian rivals, Tata Consultancy Services Ltd TCS.NS and Infosys Ltd INFY.NS, Cognizant also gets the largest chunk of its revenue from financial services clients.
Revenue from its financial services sector, which accounts for more than a third of its total revenue, rose 10.7 percent, while revenue from healthcare services rose 4 percent in the first quarter.
The company reported its slowest quarterly revenue growth in 14 years as majority of its clients held back on spending.
Cognizant also forecast its second quarter earnings below estimates and tightened its revenue range for the full year.
“First quarter saw softness in healthcare and financial services sector. So, this makes numbers for second quarter and full year a little difficult,” President Gordon Coburn told Reuters.
New Jersey-based Cognizant said it expects second quarter revenue in the range of $3.34 billion-$3.40 billion and adjusted earnings between $0.80-$0.82.
Analysts on an average had expected a profit of 84 cents per share and revenue of $3.41 billion, according to Thomson Reuters I/B/E/S.
However, Coburn said he does not expect the trend to continue for the full year.
The company has been placing big bets on digital services as it seeks to offset the cut in client spending.
“We are looking at more acquisitions for the year in the digital services sector,” Coburn told Reuters.
The company’s net income rose to $441.2 million, or 72 cents per share, in the first quarter ended March 31, from $382.9 million or 62 cents per share, a year earlier.
The company’s revenue also rose 10 percent to $3.20 billion.
Excluding items, the company earned 80 cents per share.
Analysts on an average had expected a quarterly profit of 79 cents per share and revenue of $3.23 billion, according to Thomson Reuters I/B/E/S.
TCS and Infosys, India’s biggest IT services firms, in April also reported better-than-expected quarterly profits.
Reporting by Rishika Sadam in Bengaluru; Editing by Shounak Dasgupta