Infosys Technologies Ltd reported a 30.2 per cent rise in net profit for the September quarter, beating its own and street estimates. It, however, pared revenue outlook in dollar terms for the fiscal due to currency volatility and the economic crisis in the US, which accounts for 61.5 per cent of its business.
Aided by a weak rupee, Infosys raised its revenue outlook for the year by half a per cent to Rs 21,731 crore, up from the July forecast of up to Rs 21,622 crore. Net profit for September quarter stood at Rs 1,432 crore on revenues of Rs 5,418 crore, as compared to Rs 1,100 crore on revenues of Rs 4,106 crore in the year-ago quarter.
Tracking the results, shares of Infosys hit an intra-day low of Rs 1,040 before recovering to close at Rs 1,226.70 on the Bombay Stock Exchange, a fall of 2.2 per cent over the previous close. It announced an interim dividend of Rs 10 per share. “We have revised our US dollar revenue guidance to reflect the current economic situation and the drastic depreciation of major global currencies against the US dollar,” said Mr S. Gopalakrishnan, CEO, Infosys.
Terming the second quarter performance as “excellent”, Mr Gopalakrishnan said the sequential revenue growth in rupee terms was at 11.6 per cent and 5.3 per cent in dollar terms. Infosys saw a volume growth of 6.5 per cent during the quarter, while its operating profit margins improved by three per cent to 33 per cent.
Infosys cut its dollar revenue forecast for fiscal 2009 by six percentage points. It now expects revenue to be between $4.72 billion and $4.81 billion. For December quarter, the revenue expectation is between $1,175 million and $1,220 million.
“Even after so much turmoil in the market, Infosys has arbitrarily cut only 3 per cent of its revenue because of the uncertainty, which can be appreciated,” said an analyst with the Mumbai-based brokerage Motilal Oswal Securities.
The company added 40 new clients during the quarter. It signed five transformation deals and five large outsourcing deals of which three were about $100 million each. “There is no problem in winning deals, but delayed decision-making and ramp-ups continue to be an issue,”
said Mr S.D. Shibulal, Chief Operating Officer, adding that Infosys was pursuing 12 deals of reasonable size with a 9-12 month incubation period.
Despite adverse market conditions, the company maintained that pricing environment was stable. “We benefited from the depreciation of the rupee against the dollar, which was partially offset by the sharp appreciation of the dollar against all other major currencies,” said Mr V. Balakrishnan, Chief Financial Officer.
The rupee depreciated against the dollar by six percentage points during the quarter and the average rate was Rs 44.50. “Our liquidity position continues to be strong with cash and cash equivalents reaching $1.9 billion,” Mr Balakrishnan said.