Mumbai, Oct. 10: Infosys today unwrapped second-quarter numbers that more than met expectations with a 12 per cent leap in net profit at Rs 225.77 crore. However, the fact that the sales spurt was stronger than the profit push suggested making money would be harder.
The increase in profit from Rs 201.56 crore in the second quarter of 2001-02 came on the back of sales that beat analysts’ expectations. With a reputation for delivering more than it promises, Infosys had forecast revenues between Rs 762-Rs 781 crore for the quarter.
Income from software development services and products stood at Rs 879.57 crore, an increase of 35.29 per cent over the same period of the previous fiscal. Markets cheered the numbers, pushing up the Infosys stock over 4.5 per cent to close at Rs 3634.80, a gain of Rs 159.75 over its finish on Wednesday.
Analysts said it was provisions worth Rs 23.76 crore, made against strategic investments of the past, that weighed down profit. These covered money pumped into OnMobile Systems of US (Rs 8.95 crore), Workadia Inc (Rs 7.21 crore), JASDIC Park Company, Japan (Rs 0.75 crore) and Asianet Media (Rs 6.85 crore).
More heartening is the fact that expected profits for the year ending March 2003 have been pushed up by a few notches. Income from software development services and products is projected between Rs 3,433 crore and Rs 3,467 crore against Rs 3108-3195 crore earlier.
For the third quarter ending December 31, income is forecast in the Rs 890 crore to Rs 904 crore range , while earnings per share (EPS) could hover around Rs 37-Rs 38. This is proof the company believes that since margins have been under pressure, the surge in profits would not be commensurate with that of sales.
“We have increased our guidance for 2002-03 despite a challenging economic environment. Our customer focus and superior delivery capabilities, combined with increased acceptance of the offshore outsourcing model, have accelerated the revenue growth beyond our initial projections,” said Nandan M. Nilekani, CEO, president and managing director of Infosys.
For the quarter ended September 30, software revenues in dollars grew 16.1 per cent on a sequential basis. Sales volumes increased 11.7 per cent, while prices shot up an average 4.4 per cent over April-June.
The firm hired 1,806 employees between July and September against 566 people in the previous quarter, taking its strength to 11,000. Eighteen new clients were roped in. The directors recommended an interim dividend of Rs 12.50 per share — 250 per cent on an equity share of par value of Rs 5 each — at their board meeting held here today.
Shine rubs off
The euphoria rubbed off on Wipro, the other top-rung software services major that jumped 1.80 per cent to Rs 1352.60. Initially, there was some selling in most infotech shares by foreign institutional investors, but Infosys helped reverse the trend, forcing them to cover short positions.