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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (4941)	7/6/1999 11:11:00 AM
From: Mohan Marette	Respond to of 12475

India software firms Q1 sales seen strong By Suresh Seshadri MADRAS, India, July 6 (Reuters) - India's computer software firms are expected to post strong first quarter sales growth this week, buoyed by new business opportunities. But earnings growth will be slower due to the seasonal effect of software firms typically making new recruitments in the first quarter to June 30, a move which increases overheads without a corresponding addition to revenue, local software analysts said. ''For the top companies we're looking at a sales growth of over 75 percent compared with the first quarter of last year,'' R. Sukumar, fund manager of Kothari Pioneer's Infotech Fund, said. A range of new businesses including e-commerce and Internet-based applications, along with solutions for the millennium bug are driving growth, analysts said. ''Overall, we see a continuation of the fourth quarter growth, with profits at most companies growing at about 50 to 55 percent year-on-year,'' said Srividhya Rajesh, software analyst at Sundaram Newton Asset Management Co Ltd. Although robust, the profits compare with an even more dazzling first quarter last year when earnings at a number of firms grew by 100 percent or more. This year the sector is expected to also benefit from a first quarter drop in the rupee, the analysts said, noting that exports comprise a large chunk of earnings for Indian software firms. Since April when the current financial year began, the rupee currency has fallen 1.85 percent to around 43.25 per dollar, mainly due to fighting in the disputed region of Kashmir where India is battling Pakistan-backed intruders. Local blue-chip Infosys (http://www.inf.com/) Technologies Ltd (Nasdaq:INFY - news) is expected to lead the sector with an expected 92.2 percent rise in net profit, according to a Reuters survey released last week. That survey projected Infosys' net at 454.99 million rupees ($10.56 million) in the three months to June 30, from 236.7 million rupees ($5.49 million) in the same period last year. Sales were forecast to swell a hefty 68.9 percent to 1.66 billion rupees ($38.52 million) from 984.3 million. Alroy Lobo, software analyst at Kotak Securities, said the earnings could be higher. ''I don't think the poll has factored in the surplus cash the firm has and how it deploys it. I think they've only looked at the core business,'' he said. Infosys' recent decision to ally with U.S.-based e-commerce firm CyberSource Corp would help growth. ''Already the share of the e-commerce and Internet related business is about five percent plus and their relationship with CyberSource should help grow this segment,'' said Vijay Baoney, software analyst at Jardine Fleming India Broking Ltd. Satyam Computer Services Ltd(http://www.satyam.com/) will ride on an increased presence overseas and its inroads into the e-commerce segment. BFL Software (http://164.164.49.100/bflnew/index.asp) and Pentafour Software and Exports Ltd (http://www.pentafour.com/) are also expected to fare well. ''At Satyam we're expecting earnings growth of about 80 percent, at BFL we are looking at 44 percent and 60 to 65 percent at Pentafour,'' Rajesh said. Sonata Software(http://www.sonata-software.com/) is expected to kick off the season with its earnings report on Wednesday. It is followed by BFL Software's results on Thursday and Infosys on Friday. biz.yahoo.com ($1 equals 43.09 Indian Rupee)