FT.com / Companies / IT - Infosys quarterly profit jumps 70 per cent

FT.com / Companies / IT - Infosys quarterly profit jumps 70 per cent

Infosys quarterly profit jumps 70 per cent
By Reuters Apr 13 06:12:49

India’s second-largest software exporter, Infosys Technologies Ltd., reported a forecast-beating 70 per cent rise in consolidated quarterly profit as outsourcing by foreign clients surged, but predicted more modest earnings growth for this fiscal year.

The company said per share earnings, before exceptionals, for the current fiscal year were expected to grow by 20-22 per cent to between 80.29 and 81.58 rupees, which traders said was muted by its standards.

That compared to a 53.5 per cent surge in per share earnings before exceptionals to 69.11 rupees for the fiscal year that ended on March 31.

”Our liquidity position continues to be strong with cash and cash equivalents reaching $1.4bn,” V. Balakrishnan, chief financial officer at Infosys said in a statement.

Nasdaq-listed Infosys, which develops applications, designs supply chains and offers back-office services, said on Friday its consolidated net profit was 11.44bn rupees ($267m) in the three months ended March, versus 6.73bn in the same period a year ago.

That compared with a mean net profit of 10.31bn rupees in a Reuters poll of 14 brokerages.

Analysts say the software and back-office services industry, which earns nearly 90 per cent of its revenue from overseas clients, will win more outsourcing jobs in the coming months from foreign firms that are looking to cut costs at home.

India’s large pool of English-speaking engineering workforce and cheaper wages of nearly one-fifth of Western salaries have helped to attract outsourcing. But the services firms’ ability to raise billing rates to offset higher wages and other costs may be limited because of the spectre of a U.S. economic slowdown, said analysts.

Top exporter Tata Consultancy Services Ltd. and third-biggest Wipro Ltd. are expected to report their profits grew 47.8 and 29 per cent respectively, the Reuters poll showed. TCS is due to report on Monday and Wipro on April 20.

India’s software services exports are expected to have risen 33 per cent to $31.3bn in 2006/07, and are targeted to hit $60bn by 2010 as firms such as Infosys and TCS take advantage of low-cost labour to grab global outsourcing.

Shares in Infosys, which counts ABN AMRO and Goldman Sachs among its clients, fell around 10 per cent in the March quarter, compared to more than a 7 per cent decline in the IT sector index and 5 per cent dip in the main BSE index.

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