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– G.R.N. Somashekar

Bullish mood: Mr V Balakrishnan (left), CFO, Infosys; Mr S. Gopalakrishnan, CEO and Managing Director, at a press conference in Bangalore on Friday.

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Bangalore, July 11 Infosys Technologies Ltd reported a 20.7 per cent increase in first quarter net profit that beat estimates, partly helped by a depreciating rupee. The company continued to remain “cautiously optimistic” about the business environment for the near future.

India’s second largest IT services provider also increased its revenue estimates in rupee terms for fiscal 2009 to a year-over-year growth of 27.5 per cent to 29.5 per cent from 19.2 per cent to 21.1 per cent announced in April, because of the weakening rupee.

Revenue estimates in dollar terms remain unchanged, the company said.

For the latest quarter, net profit after tax was Rs 1,302 crore, compared with Rs 1,079 crore in the year-ago quarter, Infosys said. Income increased 28.7 per cent to Rs 4,854 crore (Rs 3,773 crore)

Despite better than expected results, Infosys’ share price dropped 7.18 per cent to close at Rs 1,676.45 on Friday at the Bombay Stock Exchange.

Speaking on the company’s performance, Mr S. Gopalakrishnan, CEO and Managing Director, said there is a shift in focus towards the global delivery model, and this is driving growth for Indian companies such as Infosys. The slowdown would prompt more companies to look at the global delivery model, he added.

The global delivery centre is a network of centres spread across the globe, starting with India for Indian IT service providers.

Margins for the first quarter were impacted, due to increases in salary and visa costs, (by 2.2 per cent and 0.7 per cent respectively) which were, to some extent, offset by rupee depreciation, said Mr V. Balakrishnan, Chief Financial Officer. The wage hike for the period ranged from 11 per cent to 13 per cent for Indian employees and four per cent to five per cent for employees outside India.

For the second quarter, Infosys said it expects revenues in the range of Rs 5,229 crore to Rs 5,272 crore. For the fiscal 2009, it expects revenue of Rs 21,278 crore to Rs 21,622 crore. The company had, at the end of March 2008, forecast revenues of Rs 19,894 crore to Rs 20,214 crore for the period.

Infosys said it has hedged $811 million for Rs 43.04 to the dollar. The rupee would continue to be volatile, it said. Assuming the rupee stays at the same level through the year, Infosys could gain Rs 1,500 crore, it added. Infosys also said Europe contributed 27.3 per cent of total revenue, down from 29.3 per cent in the fourth quarter of 2008.

The company reiterated its desire to get aggressive on the acquisition front. The company had earlier told Business Line that it intends to acquire a company in Europe and that it is talking to two or three companies. Mr Gopalakrishnan today added that the deal size would be between $ 300 million and $ 500 million.

More Stories on : Financial Performance | Software | Infosys Technologies Ltd | Outlook

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