The Hindu Business Line : `Infy may project conservative estimates'

Continuing with its credo of "under-promise and over-deliver", Infosys Technologies Ltd may project a conservative revenue and profit growth for 2006-07.

A cross-section of analysts told Business Line that they expect Infosys's revenue growth to be in the range of 24-28 per cent for the year while growth in earnings per share (EPS) is estimated to be 22-24 per cent.

The guidance for the year is more or less expected to be on the lines of what the company had projected for the previous year.

Infosys had projected revenue growth of 24.7-26.6 per cent and EPS growth of 23-25 per cent for 2005-06 over the previous year.

The company actually might achieve year-on-year revenue growth of close to 33-34 per cent and profit growth of around 32 per cent for the year gone by, according to analysts.

Revenues are expected to cross $2 billion; the company will announce its results on April 14.

"A quarter-on-quarter revenue growth of 5-6 per cent should be easily achievable for Infosys in the current year," said an analyst with a domestic brokerage.

"Typically, as the revenue base widens, growth tends to slow down a bit. To manage a growth of 20-24 per cent, Infosys needs to add 15,000-20,000 people during in the year," said another analyst.

Notwithstanding an anticipated stable pricing regime, barring small upticks in some new deals and existing accounts, factors like wage inflation and the impact of volatility in currency movement may keep margins under pressure during the year, an analyst said.

Even as outsourcing and offshoring interest continues to remain strong, Indian companies such as Infosys are facing increasing competition from global IT vendors such as IBM, Accenture, and EDS.

These companies continue to leverage their offshore presence and ramp up their capabilities.

CLSA in a recent report said that Indian firms such as Infosys faced renewed threat from global IT vendors, which are transforming their business models to deal with the Indian competition especially while chasing smaller deals.

It cited the example of Accenture, which has developed specific teams "to target smaller application maintenance and development deals."

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