Infosys Profit Beats Estimate; Increases Forecasts (Update2)
By Ketaki Gokhale
Oct. 15 (Bloomberg) -- Infosys Technologies Ltd., India’s No. 2 software exporter, posted profit that beat analysts’ estimates and raised its earnings forecasts as the rebounding global economy boosts demand for information-technology services.
Net income rose 13 percent to 17.4 billion rupees ($394 million) in the three months ended in September, Bangalore-based Infosys said today. That compares with the 17 billion rupee average of 31 analyst estimates compiled by Bloomberg. Infosys will also pay a special dividend of 30 rupees a share.
Infosys joined Intel Corp. among major technology companies indicating corporate spending is recovering. Chief Executive Officer S. Gopalakrishnan, who cut prices in 2009, termed the economic environment as “challenging” while the appreciation of the rupee damps repatriated earnings of Indian exporters.
“The results and guidance are very good but the only concern is that the rupee is getting stronger,” said D.K. Aggarwal, who manages about $100 million as chairman of SMC Wealth Management Services Ltd. in New Delhi.
Infosys fell as much as 2 percent to 3,122.35 rupees after rising as much as 2 percent to a record 3,249 rupees. It changed hands at 3,128.55 rupees, down 1.8 percent, at 11:27 a.m. in Mumbai.
Raising Guidance
The company said it now expects sales in the year ending in March to range from $5.95 billion to $6 billion, compared with a July forecast for as much as $5.81 billion, the statement said. Earnings per share will be $2.54 to $2.58 per American depositary receipts, compared with a previous estimate of as much as $2.52.
Infosys also raised the sales and EPS guidance in rupee terms, under IFRS accounting rules.
“Investors were too optimistic about Infosys,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., an equities research provider in Mumbai. “A big surprise was needed for it to pull the market.”
The Indian rupee is Asia’s best-performing currency against the dollar in the past month with a 5.2 percent appreciation. The stronger rupee hurt the company’s operating margin by 1.5 percent, Chief Financial Officer V. Balakrishnan said today.
In the past quarter, Infosys won orders including a contract from Turklandbank AS and the Global Group, an Indian telecommunications infrastructure company. Sales rose 24 percent to 69.5 billion rupees, beating analysts’ estimate for 67.2 billion rupees.
Adding Labor
The software-services provider, which derived 66 percent of its revenue from companies in North America and 23 percent from Europe in the year ended March 31, added 27 clients during the quarter, according to the statement.
Worldwide information technology spending, which includes computer equipment and software purchases, will grow 7.8 percent to $1.58 trillion this year after falling 8.9 percent in 2009, according to July estimates from Forrester Research Inc.
The U.S. will lead the growth, spending an estimated $550 billion on information technology this year. Spending in the U.S. will outpace gross domestic product growth as companies make up for orders delayed during last year’s recession, according to the Cambridge, Massachusetts-based firm.
Infosys’s workforce grew by 7,646 employees in the second quarter, the company said.
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Infosys Technologies Ltd. (INFY)
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