Infosys Technologies announced a 2.7 per cent drop in its consolidated profit growth in the quarter ended March 2010 over the same period last year, much on the lines of what the analysts expected but came out with a strong forecast in dollar terms leading the stock to gain 3.7 per cent during the day when the Sensex fell.
“Fiscal 2011 revenues are expected to grow by 9 per cent to 11 per cent in rupee terms; to grow by 16 per cent to 18 per cent in US dollar terms,” Infosys said in a statement.
Infosys shares ended the day with a gain of 3.7 per cent after falling marginally in the initial trading hours after initial pessimism on the outlook was reversed.
“Strong forecast on dollar terms resulted in this sharp movement and also there were lot of short positions on the IT stock which got covered during the day with support coming from institutional investors,” said Alex Mathew, head of research at Geojit BNP Paribas Financial Services.
Experts feel that leading IT players are expected to mirror Infosys results. However companies with more domestic component in their business will fare better, experts said.
“I think that companies that have a bigger domestic business in their total portfolio will come out with better results,” said Diptarup Chakraborty, principal analyst at Gartner. However the margins are expected to be under pressure going forward.
“I expect the bottom line of the IT companies to be under some pressure in the coming quarter as the impact of rising rupee and the salary hikes will be felt more in the quarter ending June 2010,” said Chakraborty.