RESULT ANALYSIS: Infosys Technologies

Revenues come in below street expectations with guidance still cautious about global demand.

Infosys Technologies reported revenues of Rs 7106 crore for the third quarter ended December 2010, about 2.2% above the upper level of guidance given last quarter. The revenues in USD terms clocked in a more satisfactory 6% quarter-on-quarter (q-o-q) growth to $1585 million. Management pointed towards an impact from the rupee volatility given the average USD-INR rate in Q3FY11 was Rs 44.83, 3.5% appreciation q-o-q but still lower than company expectation of Rs 44.50 indicated last quarter. The quarter saw volume growth of 3.1% with pricing growth of 1.6% and margins were stable at about 30.2% as the company reported net profit growth of about 2.5% q-o-q and 14% y-o-y to Rs 1780 crore.

The company guided for a muted 1-1.7% sequential revenue growth for the next quarter. A key dampener was the relatively cautious commentary on business outlook, as CEO and MD, S Gopalakrishnan, continued to emphasize the risks from weaker economic recovery and sovereign default on demand. However, management clarified that environment suggests a normal year ahead for the company and industry with growth in the higher teens.

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