Infosys Q2 net profit spurts 53%

Revenue expected to cross $3 bn in 2006-07.

Raising the bar a couple of notches higher, Infosys reported a scorching 53 per cent increase in net profit for its second quarter ended September 30, 2006, at Rs 929 crore, from Rs 606 crore during the corresponding quarter last year.

Driven by strong volume growth, the topline, too, moved up 50.4 per cent to Rs 3,451 crore for the quarter.

The Infosys scrip on the Bombay Stock Exchange closed just short of 4 per cent higher at Rs 1,980 in a market that was almost flat, with the Sensex dipping by around 10 points.

The second-largest software exporter from India, given the buoyant offshoring trend in global markets, has upped its guidance for the full year, stating that it will cross the $3 billion mark during 2006-07.

"We took 23 years for the first billion, 23 months for the second billion, and we will take a year for our next billion," said a confident Nandan M Nilekani, CEO and MD, Infosys.

Sequentially, net profit has moved up by 16.1 per cent, while income has recorded a strong 14.5 per cent growth rate. On a half-yearly basis, net profit has grown by 52.1 per cent while income has surged by 48.1 per cent.

The compelling value proposition offered to clients by Infosys' global delivery business model prompted Nilekani to dismiss any signs of easing, even as global infotech behemoths kept increasing their Indian play.

"Any legacy players can set up shop in India, but that has not disturbed our growth. Our robust organic growth, coupled with investments in various strategic areas, helped us to grow faster in this environment," he said.

Infosys added 45 new clients while simultaneously adding a record 10,975 (net 7,741) employees during the quarter.

The company, which is going in for its third sponsored American depository shares issue of 30 million shares expected to be valued at around $1.5 billion, also said at the current juncture, it did not see any evidence of global slowdown.

"We did a dip-stick study with our clients on what they feel of the much talked of slowdown in the US economy. The response has been that their infotech budgets will be either flat or will grow by 3-4 per cent with a strong offshore element to it," Nilekani said.

Infosys said the pricing environment continued to be stable with an upward bias of 1.2 per cent for existing clients, while there was an increase of 3-4 per cent for new contracts.

The company has also managed to grow its operating profit by 54.7 per cent owing to marginal depreciation of the rupee and the absence of visa costs, strongly visible in the first quarter.

"Our operating profits improved despite absorbing wage increases and other strategic investments," said V Balakrishnan, CFO, Infosys.