Infosys' Quarterly Profit Up 52.4 Pct.

Posted 11 January 2007 @ 01:19 pm EET     Print     Reprint     E-Mail     Comments

NEW DELHI (AP) - India's Infosys Technologies Ltd. said Thursday its net profit jumped 52.4 percent in the most recent quarter from a year ago on strong outsourcing orders. The company, which writes and develops software for Western companies like Goldman Sachs and J.C. Penney Co., said it added 43 new clients during the quarter.

"The globalization of services continues to be strong. We do not see any reduction in global spending on IT (information technology)," said Infosys Chief Executive Nandan Nilekani. Infosys' net profit for the October-December quarter rose to $218 million from $143 million in the same period last year, in line with what analysts expected.

Revenue for the fiscal third quarter expanded 47 percent to $821 million from $559 million a year ago. Nilekani said the company was negotiating several big-size deals, but refused divulge the details. The company added 3,282 new employees during the quarter, taking its total headcount to 69,432.

Infosys shares, however, fell 2 percent to 2,125 rupees ($48) in early trading on the Bombay Stock Exchange as the company's forecasts for revenue and earnings per share appeared to have disappointed investors. Infosys predicted sales for the fiscal year through March would rise 44 percent to $3.09 billion. The Nasdaq-listed company said earnings per share for the fiscal year would rise 44 percent to $1.47.

Analysts said the company has done well in maintaining its profit margins despite an appreciation of the Indian currency, which erodes revenue when overseas earnings in dollars are converted to rupees. "The muted guidance is perhaps based on expectations of a further strengthening of the rupee," said Divya Nagarajan, analyst at Motilal Oswal Securities, a Mumbai-based brokerage firm.

The rupee appreciated about 2.5 percent during the October-December quarter, said V. Balakrishnan, chief financial officer of Infosys. The company's operating margin would have increased at least 2 percent more in rupee terms if there was no appreciation, he said. Nilekani, the CEO, said the company's billing rates which in the past came under pressure because of competition have become "stable with an upward bias."

He said the company was also encouraged by new opportunities in China, where a lot of companies are keen to hire Infosys. "Apart from the rupee, all the other factors are benign," he said. Among new clients, Infosys said it has been hired by a U.S. grocery chain to enhance its information technology system supporting warehouse operations. Another new client was a large distributor of paper products in the United States. The clients were not identified.