Infosys profits from weak rupee, lowers dollar guidance (Lead)

January 12th, 2012 - 2:47 pm ICT by IANS  

Bangalore, Jan 12 (IANS) India’s second largest IT bellwether Infosys Ltd. posted robust revenue and profit growth in the October-December third quarter (Q3), propelled by a weakening rupee that forced it to lower dollar guidance for the 2011-12 fiscal.

A record 11 percent depreciation of rupee against the dollar during the quarter fuelled the global software major’s net profit to Rs.2,372 crore (Rs.23.72 billion), an increase of 33 percent year-on-year (YoY) and 24 percent sequentially from the second quarter (July-September) this fiscal under the Indian accounting standard.

A sharp decline of Rs.3 to Rs.52 from Rs.49 during the quarter forced the company to lower its revenue forecast in dollar terms by 1.6 percent to $7.03 billion for the fiscal (FY 2012) to 16.4 percent YoY from 18 percent YoY or $7.14 billion projected in October 2011 under the International Financial Regulatory System (IFRS).

“The global currency market continues to be volatile with the Indian rupee depreciating 11 percent during the quarter (October-December). Managing extreme currency volatility in an uncertain economic environment is going to be a challenge for the Indian IT industry,” Infosys board member and chief financial executive V. Balakrishnan said in a statement here Thursday.

The company, however, revised its revenue guidance for this fiscal 1.5 percent upwards to Rs.34,284 crore (Rs.343 billion) from Rs.33,795 crore (Rs.338 billion) on robust growth in the third quarter on a depreciating rupee under the Indian accounting standard.

Earnings per share (EPS) is expected to be Rs.147 for the fiscal, an increase of 23 percent YoY and Rs.32 for fourth quarter (Q4).

A weak rupee also helped the company beat revenue guidance of Rs.8,919 crore in the third quarter to post Rs.9,298 crore, registering 31 percent YoY growth and 15 percent sequentially from the previous quarter (Q2) under the Indian accounting standard.

Under the IFRS, net income grew 15 percent YoY to $458 million and gross income to $1.81 billion, up 14 percent YoY in the same quarter (Q3).

Earnings per share (EPS) also grew 33 percent YoY and 24 percent quarter-on-quarter (QoQ) to Rs.41.51 during third quarter.

For the fourth quarter (January-March) of this fiscal, consolidated revenue is projected to be Rs.9,402 crore, an increase of 30 percent YoY as per the Indian accounting standard.

Under the IFRS, gross income in Q4 is expected to be $1.8 billion, an increase of 13 percent YoY.

“The global economy, driven by slower growth in developed markets and coupled with the European crisis, could impact the growth of the IT industry,” Infosys chief executive S.D. Shibulal said in the statement.

A downward dollar guidance and Shibulal’s comments on the fallout of the sovereign debt crisis in Europe and flat IT budgets in 2012 tanked the blue chip company’s scrip of Rs.5 per share by 6.44 percent to Rs.2,644 from Rs.2,744 on opening of the trading session on the Bombay Stock Exchange (BSE). The scrip closed on Rs.2,826 at the end of Wednesday’s trading.

On the National Stock Exchange (NSE) too, the company’s share took a beating to plunge 6.53 percent to Rs.2,642 from an opening of Rs.2,750 per share.

“Notwithstanding short-term challenges, we are focused on long-term growth opportunities by investing in platforms and solutions, which will accelerate innovation, enhance returns for our clients and deliver higher business value,” Shibulal asserted.

The company and its subsidiaries in India and overseas added 49 customers during the quarter, taking the total number of active customers to 665 from 647 quarter ago and 612 year ago.

Though the company and its subsidiaries added 9,655 employees during the quarter under review, the exit of 6,389 people resulted in the net addition of 3,266, taking the total headcount to 145,088 as against 141,822 a quarter ago and 127,779 a year ago.

“We believe our focus on high-quality growth combined with our flexible financial model will position us better during these challenging times,” Balakrishnan added.

The company’s cash reserves, including investments, was at Rs.19,752 crore ($3.8 billion) as against Rs.15,897 crore ($3.1 billion) a year ago.

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