Infosys net up 29%, but outlook bleak

Expects its first annual drop in dollar sales this financial year.

Aided by a 4 per cent decline in the value of the rupee against the US dollar, Infosys Technologies today beat forecasts with a 29 per cent rise in net profit in the quarter ended March 31. However, its own forecast for this quarter and beyond spooked traders, who hammered its stock down 7 per cent in early trade. It recovered later, but still closed 2.7 per cent down — a blind spot in a spirited rally that took the Sensex to a six-month high.

The net profit in the fourth quarter of 2008-09, according to Indian GAAP, was Rs 1,613 crore, up from Rs 1,249 crore in the same quarter a year ago. However, the company expects its first annual drop in dollar sales this financial year, which could be between 3.1 per cent and 6.7 per cent.

In rupee terms, though, the company expects its revenue to increase by 1.7 to 5.7 per cent this financial year. Income during the current quarter, which ends in June, is expected to fall 4.8 per cent at the lower end of the guidance.

“The amount of uncertainty today is unprecedented. This is probably one of the worst economic environments we have seen in our lifetime,” Chief Executive S Gopalakrishnan told reporters.

According to research house Gartner, spending on technology products and services will drop 3.8 per cent this year.

The net profit of Bangalore-based Infosys, the country’s second-largest computer services provider, was boosted by an 81 per cent jump in other income – mainly interest on bank deposits — to Rs 252 crore. Total revenues in the quarter increased 24 per cent to Rs 5,635 crore.

On a sequential basis, the net profit fell for the second consecutive quarter, though this time the decline was a marginal 1.7 per cent, compared with the Rs 1,641 crore posted in the third quarter of 2008-09.

Revenues for the whole of 2008-09 increased 30 per cent to Rs 21,693 crore, while the net profit rose 28.5 per cent to Rs 5,988 crore.

In dollar terms, the company suffered a 1.8 per cent fall in revenues (US GAAP) to $1.12 billion in the fourth quarter of 2008-09. Its net dollar income rose 2.6 per cent to $321 million.

On the positive side, the company added 37 new clients — four more than last quarter — though the total client numbers fell to 579 from 583. Top 10 clients brought in 26.8 per cent of the top line in fiscal 2009, compared to 32 per cent a year earlier. As in the case of last year, roughly 95 per cent of the revenues came in from repeat business. In a tough outsourcing environment, the company managed to improve its onsite-to-offshore services ratio on a year-on-year basis.

Also read:
Apr 11: IT in Q4: Infy guidance in spotlight 

Mar 21: Infosys and TCS: The rupee effect