Profit Sales Snip Infy

Infosys Technologies stock came under sharp selling pressure today on heavy profit booking by institutional investors and its price fell 6.57 per cent to Rs 3,666.90 on the Bombay Stock Exchange (BSE). The stock was the biggest loser among the Sensex scrips. Around 6.44 lakh shares changed hands at the exchange.

The fall today reversed gains made by the scrip on Wednesday. The scrip had gained 4.6 per cent yesterday to Rs 3,924.60 in a broad-based rally over the government's big-ticket divestment in VSNL and IBP and the relaxation in the Drugs Price Control Order.

Marketmen said that some funds were heavily offloading the Infosys stock today. A large US-based fund was rumoured to have sold Infosys shares. "The market is going to remain volatile as we approach the budget and more so after the divestment announcement," said a dealer.

"The IT sector has become a sentimental play in the day-to-day market," an IT analyst with a local brokerage added. Today's fall in Infosys is just a reversal of yesterday's gains, dealers said. Infosys trades at a price-earning (PE) multiple of 31, based on its nine months ended December 2001 annualised earning per share (EPS) of Rs 120.40.

Amid tough conditions prevailing in the US, software sector as a whole is witnessing a pressure on billing rates. In the past two years, the customers have asked for prices which give them value for money due to change in the economic conditions. The company at the time of announcing its third quarter (Q3) results expressed a cautious outlook for the long term.

Nonetheless, it added 33 new customers in the third quarter ended December 2001 despite difficult market conditions. For the third quarter ended December 2001, it posted a 24 per cent rise in profit after tax (PAT) to Rs 206.04 crore on a 23 per cent rise in sales to Rs 660.81 crore, meeting market expectations. As compared to quarter ended September 2001, the company posted an 1.64 per cent increase in sales and a 2.2 per cent increase in profit after tax in the third quarter.