• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Our Bureau

MUMBAI, Jan. 10

DESPITE announcing a 24-per cent growth in net profit for the third quarter of 2003, Infosys Technologies today lost 7.5 per cent on the BSE, and was the leading drag on both the BSE-TECk index as well as the BSE Sensex.

The stock lost Rs 360.30, diving from Rs 4796 to close at Rs 4436 on the BSE with 10.8 lakh shares; the stock had touched its 52-week high, at Rs 4873, only three days ago. The BSE-TECk index lost 5.71 per cent during the day, with the Sensex falling 0.74 per cent. On the NSE, Infosys lost 7.30 per cent to close at Rs 4448.30 with 19.37 lakh shares being traded.

Of the traded shares, 20.89 per cent was up for delivery on the BSE and 17.69 per cent on the NSE.

The dominant concern among broking firms was over the company's margins.

"Infosys' EBITDA margins are the lowest we have seen in more than two or three years. Though there are specific reasons for this, consisting of one-time items as well, it does cause concern," said the chief analyst with a securities firm.

The company's EBITDA margin has fallen from 35.6 per cent in the previous quarter to 34.8 per cent during the quarter currently ended, he said.

Other market players attributed different reasons to the fall. One reading is that the market reacted negatively to the company's business outlook, which forecast near flat growth for the next quarter, as compared to the quarter currently ended.

Infosys today said it expects revenues between Rs 975 crore and Rs 989 crore for the fourth quarter; and earnings per share between Rs 39.1 and Rs 39.4.

"The company has already reported sales income of Rs 958 crore for the quarter ended December with earnings per share at Rs 38 plus. For the market, this does not present much to look forward to."

The other view is that the third quarter results fell short of market expectations, although they bettered what the company had forecast.

"The market expected much more than the net profit of Rs 258 crore for the quarter; the stock had been moving up earlier in anticipation of this, and what we saw today was only a correction of that," said an analyst with a stock broking firm.

Those who said their concern was the falling EBITDA margins of the company said they saw the stock move in a dampened fashion over the medium term as well.

The market players who took the other views held that Infosys Technologies would regain its buoyancy soon in the market, on account of the general robustness of the company.

On the Nasdaq also, the counter witnessed heavy selling pressure. At 8.45 IST, the Infosys ADR was down over nine per cent to trade at $68.10.

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
MFs can invest $1 b in listed foreign cos — Window open also for individuals, corporates

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line