Infosys profit up 19pc, misses expectations

FE Team | Published: April 16, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

MUMBAI, April 15 (AP): Infosys Technologies reported an 18.9 per cent rise in quarterly profit in dollar terms Friday, missing expectations as expenses and a rising rupee squeezed margins. Disappointed investors, who were also unsettled by a tepid outlook for earnings growth and the decision of key board member TV Mohandas Pai to retire, sent the bellwether stock down more than 7.5 per cent in morning trade. Infosys rarely misses expectations and the news offered a disappointing kickoff to earnings season for India's $60 billion software services sector, which has been pinched by wage hikes and a rising rupee. Net profit at India's number two outsourcing company was 18.2 billion rupees ($402 million) for the quarter ending March. Revenues grew 23.6 per cent in dollar terms, to 72.5 billion rupees ($1.6 billion). Analysts surveyed by FactSet had expected a quarterly profit of 18.5 billion rupees ($414 million) on sales of 73.6 billion rupees ($1.65 billion). "The numbers were lower because of some temporary issues," said Kotak Securities analyst Dipen Shah, adding that global uncertainties like the devastating quake in Japan had hurt earnings. "Some of the decision making was delayed because of the events that happened across the globe." He said the rising rupee would impact margins by 1 percentage point, while salary increases and employee additions cut into margins by 1.5 percentage points. The company's outlook for 10 to 12 per cent wage hikes for offshore employees this fiscal year represents less wage pressure than last fiscal, when a fight for talent helped drive up salaries at Indian outsourcing companies by 12 to 14 per cent, said Shah. Shah also said that the outlook in rupee terms was lower than expected for the year. Infosys said earnings for this fiscal year, which ends in March 2012, would be 126.05 rupees to 128.21 rupees ($2.83 to $2.88) per share, up 5.5 per cent to 7.3 per cent in rupee terms from the prior year. Revenues for the fiscal year should come in between 317.3 billion rupees and 322.7 billion rupees ($7.13 billion to $7.25 billion), annual growth of 15.4 per cent to 17.3 per cent in rupee terms.