Infosys Q4 net up 20.6%, announces 1:1 bonus

Infosys Technologies Ltd, India's second-largest software exporter, reported a 20.6 per cent jump in quarterly profit today, forecast better earnings ahead on an outsourcing boom and announced a 1:1 bonus issue for all shareholders.

With its 25-year old delivery engine humming well, Infosys posted a net profit to Rs 673 crore for the quarter ended March 31, up from Rs 558 crore for the corresponding quarter of the previous financial year.

The company's turnover rose 32.1 per to Rs 2,624 crore during the period, while earnings per share grew 28.6 per cent to Rs 24.45.

But the company reported a 3.2 per cent dip in sequential operating profit from Rs 861 crore in the third quarter to Rs 833 crore in the fourth quarter owing to the 1.3 per cent appreciation of the rupee during the quarter.

The company added 38 customers in the past quarter, taking the number of active clients to 460. Nine clients contributed more than $50 million each in annual revenue.

For the whole year, Infosys' topline surged 33.5 per cent to Rs 9,521 crore ($2.15 billion) with net margins of Rs 2,458 crore, an increase of 30 per cent.

Earnings per share (EPS) before exceptional item increased to Rs 90.06, registering 30.9 per cent growth.

The Infosys board of directors, on completion of 25 years of operations of the company, has recommended a 1:1 bonus issue for all shareholders, including American depository receipt holders, by capitalising a part of the reserves. The company currently has cash and cash equivalents of a little more than $1 billion.

Bangalore-based Infosys, the showpiece of India's thriving services sector, expects "stable prices with an upward bias" in the year to March 2007, with business from Europe growing faster than other revenue streams.

Infosys forecast April-June earnings per share would rise 26.1-28.4 per cent from the year-ago period, with revenue growing at 34.8-35.9 per cent.

Full-year earnings per share should rise 26.4-28.4 per cent with revenue growing 28.7-30.7 per cent. The guidance was based on organic growth and did not factor in any large deals it might win, Infosys Chief Executive Nandan Nilekani said.

The company plans to hire almost 50 per cent more staff this year, adding a gross 25,000 employees to a payroll that suffered an attrition rate of over 11 per cent in the quarter.

"New businesses are coming in at higher rates. I think we are getting 3-4 per cent higher," Infosys CFO TV Mohandas Pai said.

Nasdaq-listed Infosys, which got nearly two-thirds of its revenue from the US, expected rising demand for software services from clients in Europe, Pai said. The operating margin, at 27.5 per cent in the fourth quarter, was expected to be stable this year, he said.

"It took us 23 years to reach the first billion dollars in revenue while we reached the next billion dollars in 23 months," Nilekani said.

Infosys bagged many overseas business, but margins were squeezed as salaries rose to 8 per cent and the rupee appreciated nearly 1 per cent to the dollar in the quarter.

The Infosys board has recommended a silver jubilee special dividend of Rs 30 per share (600 per cent on par value of Rs 5 per share) amounting to Rs 827 crore. The board also recommended a final dividend of Rs 8.50 per share (170 per cent on the par value of Rs 5 per share) for financial year 2006, amounting to Rs 234 crore.

Including the interim dividend of Rs 6.50 per share (130 per cent on a par value of Rs 5 per share), amounting to Rs 177 crore, the total dividend recommended for the year is Rs 45 per share (900 per cent on par value of Rs 5 per share), amounting to Rs 1,238 crore.