Infosys: Rebooting tech sector

[seema]

Markets were eyeing Infosys Q3 for a booster, and the company didn't disappoint. India's second largest IT services provider Infosys Technologies kickstarted the result season by beating market expectations with a net profit of Rs 1582 crore in the third quarter ended December 31.

Though the Bangalore-based IT major posted a decline of 3.6% in Q3 vis-a-vis same quarter last year, it revised its full-year guidance upwards.

Here's looking into what the company's Q3 numbers say.

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[seema]

Infosys reported a 3.6% dip in consolidated net profit at Rs 1,582 crore.

Income from software services, products and business process management stood at Rs 5,741 crore during the quarter, a marginal decline over Rs 5,786 crore in the year-ago period as per Indian accounting rules.

The company expects earnings per share of Rs 25.62 to Rs 25.83, on income of Rs 5,675 crore to Rs 5,721 crore for the quarter ending March 31.

[seema]

The company, which reported a decline net profit vis-a-vis the same quarter last year, accrued it to salary hikes and a firmer rupee.

The rupee impacted Infosys' margins by 180 basis points. The company said, "Pricing, utilisation helped offset the rupee impact on margins."

Chief financial officer V Balakrishnan said, "It (rising Rupee) is going to be a bigger challenge because a lot of capital inflows are coming into the country. It will appreciate in the short term because of inflows but mostly it will be driven by what is happening globally. Rupee appreciation will impact margins but we have to see how to manage it."

[seema]

Buoyed by sequential growth in the third quarter, Infosys revised its revenue guidance for the entire fiscal (2009-10) upwards to Rs 22,500 crore (Rs 225 billion/$5 billion), a growth of 3.7 per cent over the last fiscal, as per the Indian accounting standards.

In a regulatory filing, Infosys projected a consolidated income of Rs 5,698 crore (Rs 56.98 billion) for the fourth quarter (Jan-March) of this fiscal, a growth of 1.5 percent YoY, as per the Indian accounting standard.

Under the International Financial Regulatory System (IFRS) too, the global software major has upped the guidance to $4.75 billion for this fiscal, projecting two percent growth YoY.

For the fourth quarter, revenue is expected to be $1.25 billion, a growth of 12 percent.

[seema]

The company reported a record jump of 478% in "other income" to Rs 231 crore (Rs 2.31 billion/$51 million) in third quarter this fiscal from Rs 40 crore in the same period a year ago.

During the period, the software major's cash reserves, including investments in liquid mutual funds, increased to Rs 14,449 crore from Rs 9,488 crore in the same quarter a year ago (FY 2008-09).

The company's cash reserves at the end of the second quarter (July-September) this fiscal were Rs 13,796 crore. Similarly, for the first nine months (April-December) of this fiscal, other income grew by 230% to Rs 738 crore from Rs 221 crore in the same period a year ago.