Bangalore: Bolstered by pricing stability, bellwether IT company Infosys on Friday posted 7.5 percent growth in profit for the second quarter and projected an increase in income for the entire fiscal but expressed concerns over currency fluctuations.
The company's profit increased 7.5 percent to Rs 1,540 crore for the period under review from Rs 1,432 crore in the same period in previous fiscal.
The company reported 3.1 percent rise in income at Rs 5,585 crore from software services, products and business process management for the quarter under review.
The company, however, projected a fall in income for the December quarter. It sees the income falling to the level of Rs 5,429-Rs 5,476 crore, decline of 6.2-5.4 percent Y-o-Y.
Infosys, however, is bullish on income for the entire fiscal and projected 1.2-1.7 percent growth at Rs 21,961-22,055 crore.
"In the second quarter, the business climate improved," Infosys CEO and Managing Director S Gopalkrishnan said.
Infosys stocks on the Bombay Stock Exchange despite encouraging results and forecast closed down by 1.49 percent on fears that a stronger rupee will hit the profitability of the company.
"The global currency continues to be extremely volatile, even though we have seen some stability in the rupee against the US dollar this quarter", said V Balakrishnan, CFO.
"The pricing environment seems to have stabilised. There
is increasing traction for our system integration services due
to mergers and acquisitions, especially in the financial
services segment," company COO S D Shibulal said.
A series of bank failures in the US starting with Lehman
Brothers and the resultant global economic downturn had had a
profound impact on banking, financial services and insurance
companies who form a major part of clientele for IT firms.
"Clients continue to be cautious and conservative while
taking decisions," Shibulal added.
He said the company's business model had proved "too
strong and resilient" and strategy to focus on strengths had
paid off. It had been able to sustain "our margins", and was
hopeful of "emerging stronger when the economy improves".
"We are sharpening focus on research and development,
IP-based solutions, and new engagement models that offer
flexible pricing and greater operational control and
efficiency to clients," he said.
The company reported cash and cash equivalents of Rs
13,796 crore as on September 30, 2009 against Rs 8,858 crore
as on September 30, 2008.
Infosys continued to focus on high quality growth with
superior margins. "Our balance sheets have been further
strengthened with cash and cash equivalents reaching USD 2.8
billion," he said.
The company's outlook under IFRS for fiscal year ending
March 31, 2010 expects consolidated revenues to be in range of
dollar 4.60 billion and dollar 4.62 billion, while
consolidated earnings per American Depository share are
expected to be in the range of dollar 2.09 and dollar 2.10.
Infosys and its subsidiaries added 35 clients during the
quarter and registered a gross addition of 6,069 employees and
a net addition 1548 for the quarter. The company would
continue to invest in sales and management and recruitment.
"We are strengthening our presence across the globe. Our
focus particularly has been on powerful emerging markets such
as Mexico, Brazil, China and India", Shibulal said adding that
it had hired 1000 personnel in China.
Currently it was preparing to take advantage of expanding
geographies and investing in sales. "Our strength, management
of large deals and transformational projects will help us as
situation improves", Shibulal said .The company expects the
slight growth to continue for the next two quarters.
"We are seeing both stability and caution", he said but the
company was prepared to take advantage of any opportunity to
engage with clients as business environment improves.
"There is improvement in the business environment and
clients are now more confident of taking decisions on starting
projects or closing deals",Gopalakrishnan said. The company
was working in five deals arising out of mergers and
acquisitions in the financial institute sector.
The company was seeing traction in almost all sectors
including BFSI and retail with exception in manufacturing,
which it expects would take some time to pick up.
Bureau Report
First Published: Friday, October 09, 2009, 20:31