Posted on 04/14/2006 2:30:17 PM PDT by The Lion Roars
The bluest of the blue chip technology companies, Infosys Technologies Ltd., also India's second-largest software exporter, reported a 21 percent jump in quarterly profit on Friday and forecast even better earnings ahead on outsourcing boom.
Bangalore-based Infosys, the showpiece of India's thriving services sector, expects "stable prices with an upward bias" in the fiscal year to March 2007, with business from Europe growing faster than other revenue streams.
"New businesses are coming in at higher rates. I think we are getting 3-4 percent higher," TV Mohandas Pai, chief financial officer, told in an interview after the result.
Nasdaq-listed Infosys forecast earnings per share would rise 26-28 percent in the April-June quarter from a year earlier, a growth rate it expects to show for the full year.
"The global IT services industry is showing signs of stronger growth and Infosys is well poised to take advantage of that," Chief Executive Nandan Nilekani said in a statement.
Infosys, which counts ABN AMRO Bank as one of its clients, has been instrumental in raising the global profile of India's software industry, that depends on a growing army of low-cost, English-speaking engineers.
It earned a net profit of 6.73 billion rupees (8.9 million) for the fiscal fourth-quarter ended March, versus a revised 5.58 billion in the year-ago quarter, and 6.49 billion in the third quarter. Sales rose 32 percent to 26.24 billion rupees.
That compared with a median net profit of 6.89 billion rupees on revenue of 26.79 billion in a Reuters poll of 10 analysts. Infosys benefited from more business from overseas, but rising wages and a stronger rupee squeezed margins, analysts said.
"The profit is marginally lower than expected due to higher salaries," said Deven Choksey, managing director at K R Choksey Shares & Securities.
"We believe Infosys will exceed its profit guidance for the year 2006/07 -- the bonus issue confirms that confidence." Infosys announced a bonus issue, its ninth, of one share for every held. The last bonus was in 2004 in the ratio of three for one. "Our reading is that Infosys will also grow faster than the industry's growth of 27 percent," Choksey said.
European deaks rising
Infosys, which gets nearly two-thirds of its revenue from the United States, expects rising demand for software services from clients in Europe, Pai said.
"We have seen good growth in Europe and we are clearly seeing Europe will grow faster than the rest of the businesses," he said. "Europe is becoming more open to offshoring."
Pai, who was instrumental in getting Infosys listed on the Nasdaq in March 1999, steps down as chief financial officer on April 30, but will continue to be a member of the board and handle human resources.
Infosys forecast April-June earnings per share would rise 26.1-28.4 percent from a year ago to 24.76-25.2 rupees, with revenue growing at 34.8-35.9 percent to between 27.93 billion and 28.16 billion rupees.
Full-year earnings per share should rise 26.4-28.4 percent to 113.85-115.61 rupees with revenue growing 28.7-30.7 percent to between 122.54 billion and 124.46 billion rupees.
Infosys, which has a market value of about .5 billion, develops applications, designs supply chains and offers back-office facilities to clients.
The company added 38 customers in the past quarter taking the number of active clients to 460. It took in a net 3,293 employees, expanding its army of highly skilled workers earning a fraction of U.S. wages to 52,715.
Pai said the firm would hire at least 25,000 staff in the year to March 2007, inclusive of its back-office operations.
Gross hires for 2005/06 stood at 22,868. The firm said it was in talks to buy out investment bank Citigroup's holding in Progeon, the back-office arm of Infosys.
Infosys, which launched its IPO at 95 rupees a share in 1993, was the only stock in the 30-issue main index to post a fall in the past quarter. It declined 0.5 percent, compared with a 20 percent gain on the benchmark index.
The stock closed 1.8 percent lower at 3,020.80 rupees in a weak market on Thursday. The market is closed on Friday for a national holiday.
Infy result to cheer markets
Bellwether IT company, Infosys Technologies numbers are out. Following the result, the question remains whether the earnings and announcement of bonus share would be able to revive the sentiment, which is momentarily under pressure. At least the future guidance for FY 07 coming from the company has kindled hope of revival. Historically the markets have risen after the Infosys result.
Betting on very solid guidance for the future, an analyst said purely on the core income growth or volume growth, 30 per cent is extremely good and it will give a fillip to the market. Added to this, 1:1 bonus with a special dividend of Rs 30 per share is icing on the cake, which would definitely cheer the market.
"Markets generally taking cue from its earning and forecast have shaped up. Going by the result, Monday opening will be positive. TCS announces result on Monday which is also likely to good", he said.
According to Investment Advisor, PN Vijay the results could give a thrust to the Infosys stock and the company should perform in tandem with Sensex in the next one year, though margins remain a concern for the company.
Infosys, normally keeps improving its guidance, so this has come out quite nicely. The interesting thing is that they normally give a guidance of profitability slightly less than revenue and that gap is also reducing. This shows that they are quite comfortable about the margins. This is a good news for the market as a whole, because technology has a higher weightage in the Nifty, he said.
translates to more hungry CEOs want profits faster than ever.
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