The Telegraph
Since 1st March, 1999
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Market stares at Infosys screen

Mumbai, April 9: Fingers were crossed in a market that appeared cued in to Infosys’ vision of the future a day before the technology bellwether takes the wraps off its scorecard for the last financial year.

A fourth-quarter net profit of Rs 260-275 crore, a leap of 24 per cent to 31 per cent over the same period last year, is widely expected, but attention now remains riveted on prognosis, rather than performance.

This 24-31 per cent rise in fourth quarter net profit represents a sequential growth of up to 7 per cent for the quarter. On the other hand, a topline figure of at least Rs 978 crore, a rise of 43 per cent year-on-year, is projected.

However, marketmen and analysts, who are more concerned about the impact of the current economic environment and the war in Iraq on the company's performance this fiscal, consider the guidance to be crucial. Nervousness in this regard, today saw the Infosys share falling by Rs 68.70 to Rs 4,158.05.

There are wide expectations that Infosys will throw up an earnings-growth guidance in the range of 18-20 per cent for this fiscal. Analysts feel that any guidance put forward by the company below this figure could be damaging for its stock price and could also influence the prices of other software scrips.

“The margins in the industry are collapsing due to intense competition. For the year, operating margins have come down from 40-35 per cent. There is a dip in the companies' realisation on both on-site and offshore fronts,” says Gurunath Mudlapur, head of research of Khandwala Securities, echoing the apprehensive mood prevailing in the market.

Another analyst from a leading private sector bank said that the caution has come on account of deferment of contracts during the January-March quarter and client visits dwindling due to travel advisories following the war. “Therefore the guidance given by Infosys may set the trend for other technology results,” he added.

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