Bangalore: Infosys Ltd, India’s No. 2 software services exporter, reported a 9.7% rise in quarterly profit, roughly in line with expectations, as a weak rupee boosted margins.
Bangalore-based Infosys said on Wednesday that consolidated net profit rose to Rs1,9.06 crore ($387 million) for the fiscal second quarter ended 30 September, from Rs1,7.37 crore reported a year ago.
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A Reuters poll of brokerages had forecast a profit of Rs1,891 crore for the company, which counts Goldman Sachs, BT Group and BP among its main clients.
• Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities, New Delhi:
“I think the results are slightly better than expected. The dollar revenue guidance cut is also on expected lines. Their rupee-denominated revenue is holding up, that is the only saving grace. There are concerns on the demand front but definitely rupee depreciation is coming as a blessing in disguise.”
“Under the new management we need to see whether there is any change in their outlook and approach. I think Infosys has been over-conservative. They have not deployed cash, have shied away from doing any big acquisition. But now I think they have to bite the bullet otherwise they will gradually lose the tag of second-largest software firm.”
• R.K. Gupta, managing director, Taurus Asset Management, New Delhi:
“The results have been helped partly by the depreciation in rupee. The main thing to watch out for will be how the US and Europe will move in the coming months. But Indian IT companies and Infosys in particular have a cost advantage over their global peers. I am not very pessimistic on these companies.”
• Mahesh Patil, fund manager, Birla Sun Life Asset Management, Mumbai:
“The results have been largely in line with expectations. The cut in the revenue guidance has more to do with the cross currency impact with the euro and pound depreciating and less to do with the global business environment.”
“However, uncertainties in the global economy continue and that will have to be watched out for. There is a fear that there could be some cut in the spending by global companies but the rupee depreciating will help the outlook.”
• Tejas Doshi, vice president, Research, Sushil Institutional Equities, Mumbai:
“Infosys has reduced the dollar guidance by about a percent but other than that things are fine.”
“It’s about the IT spend (by clients) especially on the discretionary side. With overall uncertainty increasing, they tend to be a bit cautious. In that context, we need to see the comments about global economic environment.”
“The rupee has depreciated quite a bit in the last two months, which actually benefits the Indian IT companies.”
“This helps them realign contracts and look at settlement of price and also hedge themselves aggressively at a time when rupee is far more attractive.”