The Telegraph
Since 1st March, 1999
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Infy & inflation light up mood
- Tech titan posts sharp rise in net

Mumbai/ Bangalore, April 13: Infosys Technologies has stunned the Street once again: the country’s second largest computer services company announced a 70 per cent surge in its fourth-quarter consolidated net profit at Rs 1,144 crore. Sales rose 44 per cent to Rs 3,772 crore.

The company, which had revenues of $3.1 billion this year, expects to grow into a $4-billion giant by March 2008.

“Our revenues grew by around $1 billion this year. The global IT services industry continues to show strong growth with exciting opportunities and Infosys is well positioned to take advantage of this,” said Nandan Nilekani, CEO and managing director, after the company announced its results.

But the bellwether for the infotech pack gave a cautious guidance for the first quarter of the fiscal which began on April 1 with sales estimated to rise by 29.2-29.8 per cent to anywhere between Rs 3,896 crore and Rs 3,913 crore. Earnings per share, excluding one-time items, will probably gain 24.2 per cent to Rs 17.84.

Sales for the full year are estimated to rise between Rs 17,038 crore and Rs 17,308 crore from Rs 13,893 crore in the year just ended, Infosys said.

Earnings per share will probably gain 20-22 per cent —between Rs 80.29 and Rs 81.58. This growth is lower than the 53.5 per cent rise in its EPS for the just concluded year. Infosys officials said the dip in forecast in its EPS is because of employee stock option plans that would lead to a dilution in its equity.

Shares of Infosys rose 2.15 per cent or Rs 43.95 on the BSE to close at Rs 2,087.60.

Infosys, which earned 62.6 per cent of its fourth-quarter revenue from North America and 26.6 per cent from Europe, posted the strong numbers in the face of a surging rupee that undermined the value of its dollar earnings and reports of a slowdown in technology spends in the US.

The muted prospects for this year did not dampen the mood of observers as senior management of Infosys dispelled concerns that a likely slowdown in the US would hit IT spending there. Moreover, the Bangalore-based company has on many occasions in the past surpassed its own estimates by a wide margin.

The higher net profit for the quarter ended March 31 was on account of a reversal in tax provision amounting to Rs 124 crore. Most analysts, who were worried about the impact of an appreciating rupee, had estimated Infosys to post a net profit in the region of Rs 1,030 crore. For the entire fiscal, its net profit stood at Rs 3,856 crore against Rs 2,458 crore in 2005-06.

The company has 72,241 employees who serve 500 active clients. It added 34 clients in the fourth quarter.

The attrition rate at the company has risen to 13.7 per cent in the fourth quarter from 13.5 per cent in the third quarter and 11.2 per cent in the second quarter.

“What Infosys is saying through its guidance is that despite the rupee appreciation, its core earnings will be always strong,” Harendra Kumar, head of research at ICICI Direct told The Telegraph.

Top-level change

The board of Infosys has approved changes at the senior level management, with Nilekani becoming co-chairman of the board, effective June 22.

S. Gopalakrishnan will be chief executive officer and managing director, and S.D. Shibulal the chief operating officer. The board felt that having both an executive chairman and a CEO would best serve the organisation, Infosys said.

N.R. Narayana Murthy would continue to be (non-executive) chairman and chief mentor.

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