Infosys Q3 net profit up 31%

Cash reserves at $969 mn; Initiatives all on track, says Nilekani.

Infosys Technologies has posted a par-for-the-course 30.5 per cent growth in net profits to reach Rs 649 crore for the third quarter ended December 31, 2005. The top line moved up by 35 per cent to Rs 2,532 crore for the third quarter, as cash reserves closed in on a staggering $1 billion, at $969 million.

On a sequential basis, the net profit has moved up by 7.1 per cent, while the top line has surged 10.4 per cent. Earnings per share (EPS), year-on-year, has moved up 28 per cent while on a sequential quarter-on-quarter basis it has gone up by 6.4 per cent.

The company posted these numbers even as its hedging strategy was disrupted by a volatile rupee during the last quarter leading to a net impact of Rs 5 crore. Infosys for the fourth quarter of 2005-06 hedged $300 million at Rs 44.50 against Rs 45.30 during the third quarter.

The entire amount is being hedged on range-bound options as opposed to forward contracts during the third quarter.

Said Nandan Nilekani, CEO, president and MD, Infosys: "We have seen another quarter of steady growth. Our initiatives in strategic alignment, capability building and operational excellence are all on track."

Infosys during the third quarter added 36 new clients, while the repeat business was at 93.2 per cent.

Meanwhile, Akshaya Bhargava, who had been steering Progeon, Infosys' BPO unit, since inception has decided to quit.

The third quarter also saw some high attrition with a net addition of 3,226 persons against a total recruitment of 5,135. The total employee base at 49,422 is inches away from 50,000. Infosys also saw its consulting business remaining stagnant. The management said that the break-even was not expected even in the fourth quarter.

The banking products business, Finacle, however has grown substantially in the last 12 months by 94 per cent, reaching a topline of $ 62.1 million as against $31.9 million.

Progeon is also on track to reach its target of $86 million for the current financial year, posting a sequential growth of 9.7 per cent to reach $22.5 million for the third quarter and achieving a net margin of 24.4 per cent.

Infosys' Australia and China operations, BPO and other consulting business put together brought in a topline of $52 million with a net inflow of just $3 million during the third quarter.

The management said its consulting business and China operations were in the investment mode. Australian operations and the BPO business were showing good growth, but would require aggressive funding to ramp up.

The outlook for the fourth quarter on a year-on-year basis is expected to be in the range of 30.35-30.80 per cent growth in the topline, to reach Rs 2,590-Rs 2,599 crore.

Infosys is expected to inch close to the Rs 10,000 crore mark by the end of the fiscal as its topline is expected to be between Rs 9,487-Rs 9,496 crore, a growth of 33.10 to 30.80 per cent.

EPS, before exceptional items for the fourth quarter in 2005-06 is expected to be between Rs 24.30-Rs 24.70, on a year-on-year growth of 27.83 - 29.93 per cent. For the entire fiscal, EPS is expected to be between Rs 89.90-Rs 90.30, on a year-on-year growth of 30.69-31.27 per cent.