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Infosys to consider bonus issue, share split next week

Mumbai, April 6: Infosys Technologies today announced that its board would meet on April 13 to consider issuing bonus shares or sub-dividing its stock.

The announcement sent investors scrambling for its shares. The buying spree soon spread to other technology shares as well. For a market that is looking forward to the company’s fourth quarter results to be announced on the same day, the bonus announcement came as a pleasant surprise.

“I was surprised to find that Infosys has grown up to consider a stock split or a bonus,” an analyst said. Infosys had issued bonus shares in the ratio of 1:1 in March 1999. Subsequently, the company halved the face value of its shares in February 2000 to Rs 5 per share.

According to market analysts, on April 13, the board is likely to sub-divide the face value of its equity to Rs 2 per share. “If the company’s board opts for a bonus issue, it may do so in the ratio of 1:1,” said an analyst with a local brokerage.

The Infosys share opened at Rs 5,400 and shot up to an intra-day high of Rs 5,580 after the announcement. However, the share closed at Rs 5,312.15 on heavy selling, registering a gain of Rs 139.95 over its previous close. Infosys was the top-traded share with a turnover of Rs 259.40 crore on the Bombay Stock Exchange.

Though technology shares have been mauled in recent times due to concerns over the rising rupee, the past couple of sessions have seen spirited buying largely due to bargain hunting.

According to analysts, the software services giant is likely to post a ‘decent’ 8 per cent growth in net profit on a sequential basis to Rs 353 crore in the fourth quarter of 2003-04.

The company may announce a conservative guidance of around 20 per cent in bottomline growth for this year, an analyst said. “However, the company would end up sharply above this growth at around 30 per cent,” the analyst added.

In December 31, Infosys had upped its revenue guidance for 2003-04 to Rs 4,823-4,835 crore, while the net profit was revised to Rs 1,232.64 crore. While the full-year earning per share was put at Rs 186.2, this translated into a growth of 30 per cent in both revenues and net profit.

With the earning season commencing shortly, analysts believe that the strong volume growth witnessed so far is likely to persist. According to a few, incremental billing rates are inching up, albeit slowly though it is still too early for a celebration. Margins are also expected to go up marginally as infotech companies look at ways to cut costs.

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