Infosys Q2 profit up, raises full year forecast

Infosys Q2 profit up, raises full year forecast
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First Published: Fri, Oct 09 2009. 02 56 PM IST
Updated: Fri, Oct 09 2009. 02 56 PM IST
Bangalore:Infosys Technologies Ltd, India’s second largest software services firm, said second quarter profit grew 7.5% to Rs1,540 crore and raised forecast for the year ahead on improved business from customers in the US, which is seeing an economic revival.
Revenue for the quarter grew 3% to Rs5,418 crore over the year before period.
“In the second quarter, business climate has improved,” said Kris Gopalakrishnan, chief executive officer said in a statement. “Clients are now looking to invest in a few strategic initiatives and relationships to maximize value from opportunities when the economic downturn ends.”
A Mint analysis of forecasts by 11 brokerages showed Infosys’ average profit of Rs1,524 crore on sales of Rs5,629 crore.
On Thursday, technology researcher Forrester Inc., forecast a rebound in technology spending from the October-December quarter as the world’s largest economy recovers from a downturn.
The US accounts to nearly 60% of India’s software exports.
Infosys added 35 new clients. It added a net of 1,548 employees to take its total strength to 10,5433.
“The pricing environment seems to have stabilized,” said S D Shibulal, chief operating officer. “There is increasing traction for our system integration services due to mergers and acquisition, especially in the financial services segment,” he said.
Infosys raised its full year guidance to Rs21,961 crore and Rs22,055 crore, an yearly growth of 1.2% to 1.7%. In July, it forecast annual revenue to be Rs21,416 crore and Rs21,747 crore.
The rupee, which has appreciated 3.7% over the dollar in six trading sessions to Rs46.34 on Thursday, from Rs48.11 could be a concern going ahead.
“The global currency markets continue to be extremely volatile, even though we have seen some stability in the rupee against the dollar in the quarter,” said V Balakrishnan, chief financial officer. The Indian currency was almost stable during the three months to September.
Infosys said revenue in dollar terms for the year to March 2010 would decline 1.0-1.3% to $4.60-$4.62 billion, a smaller decline than its July forecast for a drop of 3.1-4.6%.
India’s nearly $60 billion outsourcing sector has been hit in the global economic downturn as its core financial clients slam the brakes on technology spending and demand sharp price cuts.
Indian firms are also facing rising competition from the likes of IBM and Accenture, who have raided their home turf as they look for growth outside their mature markets.
Nasdaq-listed Infosys, the first IT firm to kick off results, expects its earnings per share to fall 6.7-7.1% in dollar terms for the full year, less than its previous forecast of 11.1-12.4% drop.
India’s IT industry has thrived by providing services ranging from managing complex computer networks and call centres to software coding to maintaining technology operations.
Hopes for a business revival have risen in the last few months after firms including No. 1 ranked Tata Consultancy Services and Infosys won some large deals and said demand for price cuts had reduced.
But the rupee’s rise this week to its highest level in more than a year against the dollar could squeeze margins for the sector, which gets more than half its revenue from North America.
Shares in Infosys, valued at about $28 billion, jumped 30% in July-September versus a 39% rise in the sector index and a 18% rise in the broader market.
Reuters contributed to the story
raghu.k@livemint.com
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First Published: Fri, Oct 09 2009. 02 56 PM IST