Infosys Technologies has reported "comfortable" earnings for the quarter ended June 30, 2001, attributing its performance to the extremely competitive US market conditions. The company also said that it expects flat growth in the next quarter.
Infosys reported a mere 4.6 per cent increase in net profit and a 9.43 per cent increase in total income in the first quarter of FY 2002 over Q4 of FY 2001. But its net profit rose by 50 per cent to Rs 190.03 crore for the first quarter of 2001-02, compared with Rs 121.30 crore during the same period last year. Total income for Q1 was Rs 626.01 crore, an increase of 68.9 per cent over the total income of Rs. 370.64 crore for the corresponding quarter in the previous year.
Infosys chairman and CEO, N Narayanamurthy, describing the tough US market conditions, said, "There is so much blood out there in the marketplace." Narayanamurthy admitted that the software bellwether was under price pressure from both existing and new clients, but reiterated its forecast of a 30 per cent topline growth this fiscal.
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The company has forecast that total income for this year would be in the range of Rs 2,500-2,560 crore, while earnings per share was expected to be between Rs 118-121 for the year under consideration. Net profit for the year was expected to be in the range of about Rs 785-800 crore.
Infosys growth in the first quarter has been volume-led. The company has increased the quantity of business by 11 per cent while blended billing rates actually came down by 2.8 per cent. The fall in blended billing rates was because of a 6 per cent fall in offshore billing rates.
The company added 26 new clients this quarter. Operating margins for the first quarter of 2001-02 has declined by 180 basis points, as compared to the last quarter of 2000-01.
BEATING ITS OWN FORECAST: First quarter results announcement by Infosys Technologies has bettered its own earnings forecast with a year-on year growth of 72 per cent in net sales and a growth of 49.8 per cent in net profits.
Excluding other income from transfer of intellectual property rights to Onscan Inc, the growth in net profits would be around 57 per cent. Employee costs have increased by 5 per cent, from 37 per cent of the revenues in the fourth quarter of the last fiscal to 42 per cent in the first quarter of 2001-02.
Narayanamurthy said, "Our analysis on future growth is based on the downturn in the marketplace, and the consequent price pressure. We have made lots of analyses looking at myriad parameters... and we retain our original 30 per cent growth estimate. We are pleased with our performance for the quarter though based on all the inputs, the market continues to be challenging," he added.