Infosys beats estimates, returns to sequential growth in Q2
Raises guidance from negative to growth of 1.7% as net rises to Rs 1,540 cr.
Bangalore Oct. 9 Buoyed by an improving business climate and favourable cross currency movement, Infosys Technologies Ltd returned to a sequential growth in the September quarter.
The company beat its own as well as street’s estimates for the quarter, and raised revenue forecast for the year ahead.
Infosys, which had seen a sequential fall in the last two quarters, posted a net profit of Rs 1,540 crore during the period, a one per cent increase from the June quarter.
On an annualised basis, net profit grew 7.5 per cent. Revenues increased 2.1 per cent sequentially and 3.1 per cent annually to Rs 5,585 crore.
The company declared an interim dividend of Rs 10 a share (200 per cent on par value of Rs 5 each).
Infosys raised its full year guidance to an annual growth of 1.2 per cent to 1.7 per cent from its earlier estimate of a decline of 1.3 per cent to a growth of 0.3 per cent. It expects fiscal 2010 revenue to be in the range of Rs 21,961 crore and Rs 22,055 crore, compared with its earlier forecast of Rs 21,416 crore and Rs 21,747 crore given at the beginning of the quarter. Improved climate
“In the second quarter, the business climate has improved,” said Mr S. Gopalakrishnan, Chief Executive Officer and Managing Director.
“Clients are now looking to invest in a few strategic initiatives and relationships to maximise value from opportunities when the economic downturn ends,” he added.
During the quarter, there was a volume growth of about 2.3 per cent, and pricing had stabilised, Mr Gopalakrishnan said.
The company saw a 0.4 per cent increase in blended pricing.
Utilisation (excluding trainees) has improved to 73.2 per cent from 70.9 per cent in the previous quarter, indicating an increase in business. Wage increase
Infosys announced an 8 per cent wage increase for its employees in India and 2 per cent for its overseas staff effective October 1.
“The momentum gathered during the quarter would give the company better growth in the second half of the year,” Mr Gopalakrishnan said.
Infosys has the capacity to take advantage of larger opportunity if it arises.
For the December quarter, Infosys expects revenue to be in the range of Rs 5,429 crore and Rs 5,476 crore, a year-on-year decline of 6.2 per cent to 5.4 per cent.
The company has factored Rs 47 to a dollar for its guidance. However, in dollar terms, the company expects a one per cent growth in revenues for each of the remaining two quarters. Scrip down
The muted outlook due to a strengthening rupee saw Infosys scrip shed 1.5 per cent to close at Rs 2,178.35 on the BSE in a weak market.
The company’s ADR declined 3.25 per cent on NYSE at 9-15 p.m. IST.
Infosys gained $18 million from cross-currency movements, wherein the dollar weakened against other major currencies during the quarter, said Mr V. Balakrishnan, CFO.
Top five clients grew 5.8 per cent sequentially, while the remaining 566 active clients grew at 1.8 per cent. Clients cautious
“The demand environment has stabilised, but clients are still cautious about recovery in their markets,” said Mr S. D. Shibulal, Chief Operating Officer, Infosys.
Quoting a recent survey done by Infosys, he said that clients expect recovery to be protracted till late 2010.
Infosys added 35 clients including T-Mobile in the quarter, where it saw an all round growth.
“There is increasing traction for our systems integration services due to mergers and acquisitions, especially in the financial services segment,” said Mr Shibulal, adding the company was working on five such deals.
Clients were finally taking decisions on rationalising their IT systems, which is giving the company an opportunity in systems integration space, he added.
(Source: BL http://www.thehindubusinessline.com/2009/10/10/stories/2009101051950100.htm)