Aided by a weaker rupee, Infosys Technologies a net profit Rs1,302 crore for the first quarter ended June 2008 (as per Indian GAAP) translating into a y-o-y growth of 20.7%.
Income at Rs4,854 crore during the period under review, increased 28.7% on y-o-y basis. The results were above market expectations. Leading brokerage houses expected the company to earn a net profit of around Rs1,250 crore on sales of Rs4830 crore.
Earnings Per Share (EPS) increased to Rs22.75 from Rs18.89 in the corresponding quarter in the previous year.
However, the net profit for the quarters ended June 2008 and June 2007 includes a reversal of tax provisions amounting to Rs31 crore and Rs51 crore respectively.
Excluding this reversal, the earnings per share for the respective quarters would have been Rs22.20 and Rs18.00 respectively, resulting in a y-o-y growth of 23.3%.
“The company has recorded an impressive growth in topline during the recently concluded quarter due to rupee depreciation. However, in dollar terms, sequential growth in topline stood at a mere 1.1%,” said Harit Shah, research analyst, Angel Broking.
“EBITDA margins dipped on account of salary hikes carried out in April and higher visa costs. Nonetheless, the Rupee depreciation witnessed during the quarter did mitigate Margin pressure to an extent,” he added.
During the recently concluded quarter, Infosys and its subsidiaries added 49 new clients. There was a gross addition of 7,182 employees (net 3,192) and it had 94,379 employees as on June 30, 2008.
“Although the global economic environment continues to remain uncertain and could impact IT spending in the short term, we see several opportunities for growth as customers relentlessly focus on improving efficiency,” said S. Gopalakrishnan, CEO and Managing Director.
For the quarter ending September 2008, the company expects income to be in the range of Rs5,229 - Rs5,272 crore translating into a y-o-y growth of 27.4% – 28.4%
EPS is expected to be in the range of Rs23.52 and Rs23.95; a y-o-y growth of 22.1% - 24.4%
For the financial year ending March 2009, Infosys pegs the income to be in the range of Rs21,278 - Rs21,622 crore. This translates into a y-o-y growth of 27.5% – 29.5%. EPS is expected to be between Rs 99.34 and Rs101.06.
“In our opinion, the Q2 guidance of revenue growth of 7.7–8.6% and earnings growth of 13% is healthy. This would decrease the pressure of back-ended growth that was a primary concern earlier,” said Amitabh Chakraborty, President Equity, Religare Securities,
“Assuming the company meets its Q2FY09 guidance, the QoQ growth required in Q3FY09 and Q4FY09 would be 6% and 8.8% in revenue and earnings to meet full-year guidance,” he added.
“We remain positive on the stock and recommend investors to accumulate at every fall,” noted Shah.