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Indomitable Infy shows how it's done

business Updated: Jan 14, 2009 00:35 IST
HT Correspondent

Riding a depreciating rupee during the quarter and the addition of 30 new clients, the revenues and profits of India’s second largest information technology company Infosys Technologies raced ahead by 36 per cent and 33 per cent for the quarter ended December 31, 2008.

“Rupee helped a lot as it depreciated by 11 per cent and had a positive impact of 4.7 per cent on margins,” V. Balakrishnan, chief financial officer, Infosys, told HT. “We are going to focus on the per capita revenue and margins.”

Markets cheered the result as the Infosys stock rose 6.4 per cent, taking the IT index up 4.7 per cent in anticipation of repeat performance from other companies. Market experts, however, were cautious.

What it did
Rs 1,641 cr net profit* | Rs 5,786 cr revenues*
30% expected profits growth for year ended March 31, 2009
What helped Infy
A depreciating rupee
Engaging with clients to help cut costs
30 number of new clients*
No loss of clients or projects
* For quarter ended December 31, 2008
“Infosys gained on volume and had low hedging and thus benefited more due to the rupee depreciation,” said Gaurav Dua, head of research, Sharekhan. “This might not be the case for others.”

Infosys added four major deals in its client addition during the quarter, with 10 waiting, Balakrishnan said. “We did not witness any loss of clients and any cancellation of projects. But there has been a slowdown in the velocity of business.”

That is not surprising, given the meltdown that is forcing companies in the US and EU to “preserve cash and spend less”, he said. Keeping a longer term perspective, Infosys has been working closely with select clients to see how prices can be cut.

But despite clients streaming in from Satyam to Infosys, “we’ll not approach any of their clients”, said S. Gopalakrishnan, CEO and MD, Infosys.

Over the nine-month period ended December 31, 2008, Infosys saw revenues grow by 32 per cent and profits by 28 per cent and the company expects to close the year with a profits growth of around 30 per cent. “It is possible if the margins remain the way they are and the volumes keep growing,” Balakrishnan said.