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Net profit rises 33%

Mumbai, Oct. 10: It was an all-smiles day for Infosys as the company dished out a better-than-expected 33 per cent rise in second-quarter net profit and raised its revenue guidance for the fiscal which could take the company to the $1-billion league by March 2004.

Net profit for the quarter was Rs 300.16 crore, an increase of 32.9 per cent over Rs 225.77 crore in the corresponding previous quarter. This overtook the consensus estimate of Rs 295 crore.

Income from software development services and products stood at Rs 1,134.75 crore, a 29 per cent rise over Rs 879.57 crore in the same period last year.

The company, set up two decades ago by seven entrepreneurs with a capital of $250, hopes to clock consolidated net revenues of $1008 million to $1015 million this fiscal, thus putting it in the $1-billion league.

However, the company did not stop at that. It raised guidance for revenue and earnings per share (EPS) for this fiscal. While EPS for the year is projected to be between Rs 178.80 and Rs 179.30, income is expected to be between Rs 4623-4658 crore.

Analysts interpreted this upgrade in outlook as a signal that the outsourcing story still holds some promise for domestic software service companies.

In July, Infosys had announced a projected income between Rs 4496-4568 crore and EPS between Rs 169.20 and Rs 169.80.

Infosys’ strong performance came amid concerns that the appreciating rupee and pricing pressures could adversely affect its profits. However, Nandan M. Nilekani, CEO, president and managing director, said, “Growth continues to be strong. Pricing is showing signs of stability.”

Apurva Shah, senior research analyst at Prabhudas Lilladher, said, “Overall, the results are good. Though the volume growth is slightly lower, the margins have gone up for the first time in four quarters and the billing rates have improved.”

Yet concerns remain on the rupee appreciation front. T. V. Mohandas Pai, member of the board and chief financial officer, said, “We continue to hedge our forex exposure, but the appreciating rupee may impact margins.”

Analysts added that although Infosys has taken a forward cover of about $139 million, the appreciation of the Indian currency could impact it during the fourth quarter.

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