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INFOSYS TECHNOLOGIES

Infosys once again beat market expectations and its own guidance though only slightly with a total income of Rs 1,142.42 crore (Rs 789.52 crore) up 41 per cent from the corresponding previous quarter and 6 per cent up from the March quarter income of Rs 1047.23 crore. Total spending was up 46 per cent to Rs 836.30 crore (Rs 572.67 crore) and 6 per cent sequentially. Net profit was up 28 per cent on a year-on-year basis at Rs 278.12 crore compared with 216.85 crore last year. Sequentially it was up 7 per cent from the March quarter profit of Rs 259 crore.

Operational income at Rs 1,081.98 crore (Rs 764.62 crore) was up by 42 per cent. Sequentially it went up by 6 per cent over the March quarter income of Rs 1,019.85 crore. Sequential income growth is slowing down. Operating cost at Rs 733.68 crore (Rs 489.69 crore) was up 50 per cent over the year-ago period while sequentially it rose by 8 per cent over the March quarter cost of Rs 679.48 crore. Increase in costs during the quarter was on account of hike in all the cost components with software development expenses up by 52 per cent over the same period last year.

Even after a decent volume growth of 9.6 per cent during the quarter over the corresponding previous period, a 1.9 per cent decline in price has seen margins shrink. Operating profit at Rs 348.30 crore (Rs 274.93 crore) was up 27 per cent from the year-ago period.

Pricing pressure and cost increases continues. Other income at Rs 32.44 crore (Rs 24.90 crore) was 30 per cent up over the year-ago period. Depreciation was up 9 per cent on a year-on-year basis at Rs 44.26 crore (Rs 40.48 crore).

Buoyed by a better-than-expected performance for the quarter, Infosys has revised its full year guidance to a 16 per cent growth in profit for this fiscal. Its quarterly performance is, however, expected to remain flat on a sequential quarter basis with not much growth in profits projected over the next three quarters.

The market welcomed the slight revision in Infosysís earnings forecast and the stock was up almost 12 per cent to Rs 3,626 at the end of the day discounting its June quarter annualised EPS of Rs 168.10 by 22 times. The market seems to have ignored the fact that almost the entire rise in net profit came from depreciation and other income and not from operations.

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