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Europe woes hit Infy net

india Updated: Jul 14, 2010 00:50 IST
HT Correspondents

Technology bellwether Infosys Technologies on Tuesday reported first quarter profits that fell short of stock market expectations but it significantly raised its earnings outlook for the full fiscal year despite lingering worries in Europe, one of its key markets.

Net profit dipped 2.4 per cent in April-June to Rs. 1,488 crore from the year-ago period and was 7 per cent below in January-March as rising staff costs from increments and a volatile foreign exchange market hit the company's income.

Revenues rose 13.3 per cent to Rs 6,198 crore from the year-ago period.

For 2010-11 as a whole, Infosys expects revenues to rise by 16 to 18 per cent against 9 to 11 per cent that it had projected in April.

"We see a distant cloud in the horizon, but despite good growth everything is not positive. We have to wait and watch if these clouds are rain clouds of cyclone. But Infosys is better prepared to face the storms than any other company," Infosys CEO and Managing Director S Gopalakrishnan told reporters in Bangalore.

Infosys shares fell by 3.4 per cent to close the day at Rs 2,795.3 following the profit fall, but the company remains one of the strongest in rewarding shareholders, given its 17-year-long track record.

"The concern in the IT sector was drying up of orders but a growth of over 7 per cent in volumes is a strong signal and I expect the company's earning's per share to cross its expectations," said Aseem Dhru, CEO, HDFC Securities.

Despite offering salary hikes of up to 20 per cent the attrition levels increased marginally to touch 15.8 per cent during the quarter compared to 13.4 per cent in the previous quarter.

"With the market opening up, attrition has increased this quarter," said TV Mohandas Pai, head of human resources.

With the existing European clients expected to show a muted growth, the company now plans to enter into new relationships opening up for customers. The focus would now be on growing markets like Brazil, Mexico and China.