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Infosys profit trails hopes, stock roiled

Mumbai, Jan. 10: Infosys Technologies was battered on bourses after worse-than-expected numbers for the third quarter unnerved investors looking forward to more than a 24 per cent rise in net profit.

The increase in profit was fuelled by booming income from outsourcing business — a leap of 45.07 per cent. Income from software development services and products was Rs 958.64 crore for the quarter ended December 31, an increase of 45 per cent over December 2001.

At Rs 256.31 crore, the net profit went up from Rs 206.60 crore in the three months to December 2001, but that was not enough to warm the cockles of ordinary investors who began to dump what has been a bellwether stock. The dismay also spread to other technology shares and many ICE stocks melted on key bourses.

The Infosys share lost Rs 360.30, or 7.5 per cent, at Rs 4,436.10, Wipro shares fell Rs 123.25, or 7.5 per cent, at Rs 1,521.40 and Satyam gave up 4.6 per cent at Rs 261.45.

Analysts took fright at the declining profit margins in the three months to December 2002. The squeeze has been blamed, in large part, on the intensifying competition in the industry. The moderate rise in full-year profit forecast also left several observers asking for more.

Income from software development services and products for the fourth quarter is projected at Rs 975-Rs 989 crore. Full-year income under the same head is expected to be between Rs 3,578 crore and Rs 3,592 crore.

“The Infosys result, the first to come out this season, may lead to many technology stocks being re-rated in the market,” said a dealer affiliated to an FII brokerage.

Despite analysts’ pangs, Infosys CEO Nandan M. Nilekani was upbeat about prospects. “Global corporations are seeking robust, financially strong, world-class partners such as Infosys to outsource their infotech requirements. For the near future at least, we think volume growth will be the key driver of revenue.”

Infosys has close to 300 clients globally, including Bank of America and Citigroup and employs about 14,000 people, mostly based in India.

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