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Infosys quells future fright, net up 28%

Mumbai, July 10: Infosys Technologies today gave the markets the best reason yet to believe that technology shares still have it in them to be money-spinners.

A 28.25 per cent jump in net profit at Rs 278.12 crore, and predictions of rosier numbers ahead, were the high-points of its scorecard for the first quarter of 2003-04. The bright picture beamed today eclipsed the bleak performance forecast dished out three months back.

This robust performance is a reminder that the company remains in good shape to overcome the effects of a profit-squeezing rupee surge and clients’ clamour for lower rates. It is also an acknowledgement that outsourcing holds promise for software services companies.

Officials said forward deals worth $ 250 million have been tied up for the next two quarters to cope with a rising rupee.

Analysts said the performance could lead to a rise in prices of infotech shares, whose valuations have suffered considerably in the recent past. “The shadow might have shortened and the downside will be limited,” an analyst with a leading private sector bank said.

Infosys projected earnings per share (EPS) between Rs 168.20 and Rs 168.50 for financial year ending March 2004, while income from software development services and products is likely to hover around Rs 4483 crore. On a consolidated basis, income could rise to Rs 4496-4568 crore, while the EPS is seen at Rs 169.20-Rs 169.80.

In April, the EPS projected was Rs 161-Rs 163. The consolidated figure, which includes that of its subsidiary Progeon, was pegged at Rs 162-Rs 164. Consolidated income was seen at Rs 4,484 crore-Rs 4,565 crore.

First-quarter income from software development services and products was Rs 1081.98 crore, a 41.51 per cent jump over the corresponding period of the previous year.

Revenues grew, driven by a 9.6 per cent increase in volumes, but the gains were diluted by a price decline of 1.9 per cent. “The strong growth in volumes has exceeded our expectations,” said S. D. Shibulal, member of the board and head, world-wide customer delivery.

“There is renewed interest in offshore outsourcing as global corporations realise its benefits. Business opportunities continue to grow. However, the pricing environment is challenging,” Infosys president and managing director Nandan M. Nilekani said after the results.

Head-count at the company increased to 17,095 at the end of last month compared with 15,356 on March 31.

The markets gave the results a warm reception: the share zoomed to a three-month high at Rs 3,614.50 in a gain of Rs 358.80. Three months back, when it gave investors a profit fright, it descended into a funk, as did other infotech majors that came out with bleak confessions.

All that changed today however, when Infosys’ market cap swelled to Rs 23,939 crore from Rs 21,562 crore on Wednesday. The combined value of all shares in the BSE tech index gained a whopping Rs 3816 crore. The market cap of BSE Teck Index was Rs 48,988 crore, up from Rs 45172 crore.

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