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Company Report

INFOSYS

Infosys ended the third quarter with an operational income of Rs 958.64 crore (Rs 660.81 crore) up 45 per cent from the previous corresponding quarter, while sequentially the rise was 9 per cent. Against rising revenues, operational costs at Rs 625.15 crore (Rs 393.35 crore) were 59 per cent higher. While the software development expenditure went up by 56 per cent to Rs 481.62 crore (Rs 309.50 crore) selling & marketing expenses rose 124 per cent.

Infosys reported a growth of 9.6 per cent in dollar terms in software revenues, which mainly came from volume growth whereas pressure on billing rates continued. Operating profit at Rs 333.49 crore was 25 per cent over the previous corresponding quarter having remained almost flat over the preceding quarter profit of Rs 323.24 crore.

Other income at Rs 29.80 crore (Rs 14.92 crore) was almost 100 per cent up from the previous corresponding quarter, while sequentially it went up 70 per cent over the September quarter income of Rs 17.53 crore.

With a 64 per cent year-on-year increase in the tax provisioning at Rs 57.50 crore (Rs 35 crore) (28 per cent sequentially), net profit was Rs 256.31 crore (Rs 206.05 crore) up 24 per cent from the year-ago period and 3 per cent above the September quarter profit of Rs 249.53 crore.

Infosys has performed just in line with expectations as put out at the beginning of this quarter. It has added 23 new clients during the quarter, which include names like Bristol-MyeRs Squibb, AT&T Wireless, TTPCom and Compas Bank.

The client additions are slightly better than the 18 of last quarter. For the next quarter the company expects software revenues to go up 45 per cent on a year-on-year basis and 3 per cent sequentially to Rs 989 crore yielding a profit after tax of 261 crore up 24 per cent on a year-on-year basis and 2 per cent sequentially which means a very flat performance.

On a full year basis though the revenue growth has been pegged at 38 per cent over last year (revised upwards from 32 per cent at the end of the September quarter) it expects this to yield a PAT of Rs 960 crore for the full year.

The stock was down more than 8 per cent after the result came out. At Rs 4,400 it discounts its December quarter annualised EPS of Rs 150.82 by 29 times. At the current growth rates (19 per cent PAT growth for 2003) it is fully priced.

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