Infosys Technologies, India's second largest software services exporter, has raised the red flag for its earnings going forward during fiscal 2009-10 stating that the income for the first quarter will see a 5 per cent drop on a sequential quarter basis, while the full year growth will be in single digit and will be in the range of 1.7 to 5.7 per cent. This is a far cry from the 20 to 30 per cent growth the company and the Indian leading software exporters were reporting for the past few years.
The company which sets the tone for the India's software services sector earnings on Wednesday reported reported a 29 per cent increase in net profit to Rs 1,613 crore for the fourth quarter ended March 31, 2009 as compared to the corresponding quarter of last fiscal. The topline has moved up by 24 per cent to Rs 5,635 crore meeting its guidance. EBIDTA has moved up almost 26 per cent to Rs 1,663 crore.
On a sequential quarter basis, the net profit has dropped by 1.7 per cent while its topline was also down by 2.7 per cent, a clear indication of tough times ahead for the Indian software services sector. EBIDTA on a sequential quarter was also down by almost 10 per cent.
“The pricing for the quarter declined by 3 per cent,” said S.D. Shibulal, Chief Operating Officer, Infosys even as it added 37 new clients during the fourth quarter. The company has said that during the next quarter it will grow its topline in the range of 10.8-12.9 per cent on a year on year basis, while on a sequential basis it will be drop of around 5 per cent.
For the fiscal 2009, the company reported a net profit growth of 28.5 per cent to Rs 5,988 crore while its topline moved up by 30 per cent to Rs 21,693 crore. Infosys also added that its FY10 topline will grow in the range of 1.7 per cent - 5.7 per cent.
Infosys has been hit on all major fronts - sectors and geographies. Financial services vertical was down almost 10 per cent while telecom by close to 5 per cent. Infosys which derives almost 70 per cent of its revenues from the North American market said that this market for them declined by 4.5 per cent while the European market by another almost 9 per cent.
S Gopalakrishnan, CEO and Managing Director, Infosys admitted that many of their clients are impacted by the financial crisis and added that "they are looking at Infosys to help them reduce their expenses and optimize their businesses.”
Infosys added that going ahead it will tough on the people front. The company during the fourth quarter effected a goss addition of 4,935 employees (net 1,772) and 28,231 employees (net 13,663) for the year by Infosys and its subsidiaries taking the total headcount to 1,04,850 employees as on March 31, 2009.
Also read: Compass: Infosys guidance below expectations
