IT firms back in big profits

First quarter net profit growth of 28 companies at 48%.

Information technology companies are making big bucks again. The 28 infotech companies that have declared results till now for the quarter ended June 2004 have posted a three-year high net profit growth of 48 per cent.

The last time the companies came close to the 45 per cent net profit growth rate mark was in the quarter ended June 2001. Moreover, the first quarter net profit growth was three times more than the 15.82 per cent growth recorded in the first quarter of 2003-04.

The worldwide economic downturn between 2000-01 and 2002-03 took a heavy toll on infotech companies, with their net profit growth plunging to 4.67 per cent in the quarter ended March 2002.

It slipped further, and into negative territory, in the two consecutive quarters ending in June 2002 and September 2002.

A steady rise in profit was seen thereafter, from around 9 per cent in March 2003 to 22 per cent in March 2004.

The big three, Infosys Technologies, Wipro and Satyam Computer, posted decent gains in revenue and profits during the quarter ended June 2004. Wipro's revenue was 48.3 per cent higher than its revenue in the same quarter last year, while its net profit jumped 66.1 per cent.

Infosys beat analysts' expectations with a 41.8 per cent growth in its net profit on a revenue growth of 36 per cent. Satyam's net profit was up 42.8 per cent, while revenue jumped 37.9 per cent.

Even small and medium software companies have flourished. The net profit of CMC, Computech International, Aztec Software, Cranes Software and Geodesic Information Systems increased over 100 per cent in the quarter ended June 2004. Nucleus Software Exports (net profit up 90 per cent), KPIT Cummins Infosystems (net up 71 per cent) and Aptech (net up 61 per cent), too, did well during the quarter.

Notwithstanding the political backlash, the offshoring trend continued to help Indian IT services companies keep up the growth momentum.

While the top three companies posted sales growth of over 36 per cent each, KPIT Cummins, Zensar Technologies and Aztec Software recorded revenue growth of over 50 per cent each.