Infosys Q2 profit up 13%; outlook turns rosier but R bites

Information technology leader Infosys Technologies on Friday showed double-digit quarterly profit growth after rebounding from a US recession last year, but its results were clouded by the recent weakening of the dollar that could erode its earnings when translated into rupees.

Information technology leader Infosys Technologies on Friday showed double-digit quarterly profit growth after rebounding from a US recession last year, but its results were clouded by the recent weakening of the dollar that could erode its earnings when translated into rupees.

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The company, raising its outlook, said revenue in the full year 2010-11 will grow by 24 to 25 per cent, aided by more customers in US and Europe.

Net profit in the July-September second quarter rose 18 per cent to $374 million from the same period a year ago but in rupee terms the profit was up 13.2 per cent at R1,737 crore, because of changes in exchange rates. Revenues rose by a smart 29.6 per cent to $1.496 billion over the same period. In rupee terms revenues rose 24.4 per cent to R6,947 crore.

The results were better than market expectations, but its stock fell 3.4 per cent to R3,076.15 on the Bombay Stock Exchange due to exchange rate worries.

“Though the economic environment continues to be challenging, we have leveraged our client relationships, solutions and investments to grow faster in this quarter,” said S. Gopalakrishnan, CEO and managing director .

During the quarter the company added around 27 clients driven largely by strong growth in financial services and retail businesses.

Infosys also raised its hiring plans to 40,000 from an earlier figure of 36,000 for the entire year. It added 7,646 employees, taking its global headcount to 122,468.

Infosys announced a special dividend of R30 per share to mark the 30th year of its operations and also declared an interim dividend of R10 per share.

The company uses hedging in financial markets to cut the exchange risk.

“We generally maintain short-term hedges for two quarters. At present we have around $650 million as currency hedges,” S.D. Shibulal, chief operating officer told Hindustan Times.