The Telegraph
Since 1st March, 1999
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Infy in line, except at the bottom

Bangalore, July 12: Infosys today reported a net profit of Rs 523.85 crore for the April-June quarter of the current fiscal, up 32.7 per cent from Rs 394.47 crore in the first quarter of 2004.

Revenue growth was a notch higher than the projected Rs 2,020 crore at Rs 2,071.59 crore. This is around 4 per cent higher than the estimated 33 per cent.

However, investors were not too happy with the numbers, which caused a minor setback to IT stocks. In Mumbai, brokers said they had expected the company to do better than market expectations. Infosys shares fell Rs 95.50 to Rs 2,219.95.

The company has “marginally” raised its revenue guidance to 26-27 per cent for the current fiscal, chief executive officer Nandan Nilekani said. In 2005-06, income is expected to be in the range of Rs 8,947 crore to Rs 9,051 crore, a rise of 25.49 per cent.

For the second quarter (July-September), the company expects a consolidated revenue of Rs 2,215 crore. This would mean a year-on-year growth of 27 per cent.

“We have maintained our margins after absorbing an annual salary increase and the impact of a depreciating euro and pound sterling,” Nilekani said.

The rupee’s appreciation against the dollar and euro during the last three months crimped margins during the first quarter. The company took a hit of Rs 14.9 crore as a result of the appreciation, said chief financial officer T.V. Mohandas Pai.

The earnings per share for the first quarter increased to Rs 19.63 from Rs 14.54 a year ago, registering a growth of 35 per cent.

Under the US GAAP, the consolidated revenue for the quarter increased 42 per cent to $476 million over $335 million in the corresponding previous quarter.

“We had a rupee appreciation of 0.14 per cent against the dollar sequentially, from the fourth quarter of last fiscal to the first quarter of this year. The euro depreciated 4.74 per cent and the pound depreciated 3.17 per cent. As a result, we had a transaction loss of Rs 17 crore during the quarter. The impact on our operating margin was Rs 5.4 crore. With our hedging remaining positive at Rs 7.65 crore, the impact on the margin of profit was Rs 14.9 million,” he said.

Head hunt

Infosys will hire 13,500 people over the next three quarters.

Chief operating officer S. Gopalakrishnan said the company will recruit 7,000 professionals in the second quarter (July-September) of 2005-06.

“We have already hired 4,537 people (including 773 for Progeon Ltd) in the first quarter (April-June). With the exit of 1,481 employees during the quarter, the net addition was 3,056. With the hiring of another 13,500 people in the next nine months, the company will be adding about 18,037 for the entire year,” Gopalakrishnan said.

Client call

The company and its subsidiaries added 36 new clients against 29 in the corresponding quarter last fiscal. “Nine of the clients are from the Global-500 list. The success of our recently concluded sponsored secondary ADS (American depository shares) issue is yet another confirmation of the confidence the world has in our business model,” Nilekani said.

According to Gopalakrishnan, Infosys Consulting was commended by its clients and analysts as having the right business model.

“Clients have reported that projects with Infosys Consulting have delivered more than the expected business value. It shows the value proposition we have created is making the subsidiary the benchmark of the profession,” he said.

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