Infosys net up 28% in Q3

Raises full-year forecasts on booming outsourcing business

Bangalore-based infotech major Infosys Technologies has beaten its guidance for the third quarter ending December 31, 2003.

While its net profit rose 28 per cent over the corresponding period last year to Rs 328.14 crore, the topline grew 28.86 per cent to Rs 1,235.26 crore.

The company also added 30 new clients during the period. In dollar terms, Infosys saw a 38 per cent increase in revenues and a 35 per cent rise in net profit.

The earnings per share (EPS) has increased to Rs 49.43 from Rs 38.70 in October-December 2002. As a result, the company has raised its EPS guidance for the full year to about Rs 186.70, beating the previously announced EPS guidance of Rs 178.80-Rs 179.30.

For the fourth quarter, the company has given a revenue guidance of Rs 1,319-1,331 crore, with an EPS of Rs 49.70.

Significantly, there was a gross addition of 3,666 employees in the third quarter, the highest ever in a single quarter. Out of this, 362 were employed by Progeon, Infosys' business process outsourcing (BPO) unit.

"We have reorganised Infosys to face new challenges, like increased client expectations, a fast-changing economy and a new competitive scenario. We have enhanced our focus on vertical markets and on providing business solutions by leveraging technology, using our global delivery model," Nandan M Nilekani, CEO, president and managing director of Infosys Technologies, said.

Mohandas Pai, member of the Infosys board and chief financial officer, said: "Pricing has been stable and despite the largest hiring for a quarter, margins have been maintained."

Compared with the previous quarter, the operating margins are more or less stable at 33.2 per cent. Infosys continues to reap the benefits of forward hedging to reduce the impact of the appreciating rupee.

During this quarter, the company made a foreign translation gain of Rs 19 crore. Pai, however, said yesterday's announcement of duty cuts on computers and aviation turbine fuel would not have a major impact on the company.

Despite all the media attention over the backlash against offshoring in the US, more clients have been evincing interest in outsourcing to Infosys. Pai said individual companies "will continue to outsource, albeit more discreetly".

"Offshore efforts increased to 67.8 per cent during the quarter, up from 63.9 per cent in the same quarter in the previous year. Our billing for two clients, on an LTM (last twelve months) basis, has crossed $50 million each," SD Shibulal, head of worldwide customer delivery, Infosys, said.

Even though Progeon added only one client during the quarter, it registered 27.5 per cent growth over the previous quarter, with revenues touching Rs 21.78 crore.

The BPO unit has said in the coming months several deals are in the pipeline.

Infosys has incorporated its wholly owned subsidiary, Infosys Technologies (Shanghai) Company Ltd, in China.

The subsidiary will be capitalised at $5 million and Infosys has transferred $1 million as initial capital.

While the setting up of the software development centre for 200 professionals in Shanghai is progressing well, the China subsidiary will focus on offering end-to-end software services to domestic as well as multinational companies operating there. It will also serve as a hub for software services in the Asia-Pacific region.