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Infosys heads for $3 bn sales

india Updated: Oct 12, 2006 10:48 IST
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Infosys Technologies Ltd, the country’s showpiece software giant,  is set to achieve a major milestone during its silver jubilee year with a new high in revenues. The company forecast on Wednesday that the figure would cross the $ 3.0-billion mark during this fiscal (2006-07), as it reported reported a better-than-expected 52 percent jump in second-quarter net profit at Rs 930 crore for the second quarter that ended in September.

The robust results spurred a four per cent rise in Infosys’ shares, taking its market capitalisation to Rs. 1,09,703 crore on Wednesday. In the process, the value crossed that of public sector giant NTPC Ltd which closed the day down 1.4 per cent in value at Rs. 1,07,356 crore.

Revenues during the period rose by 50.4 per cent (year-on-year) to Rs 3,451 crore.  The company revised its annual revenue guidance for 2006-07 to Rs 13, 853 crore ($ 3.03 billion), signalling a rise of 45.5 per cent over the previous year. It raised its earnings-per-share forecast to Rs 66 which would mark a jump of 46.6 percent on the year. It took the company 23 years to touch the first $1-billion mark in 2004 and 24 months to cross the $2-billion mark in fiscal 2006. The third milestone is expected even faster.

Nandan M Nilekani, CEO and Managing Director, told a news conference, “Our business model provides a compelling value proposition to clients in a flat world. Our robust organic growth coupled with investments in various strategic areas helped us to grow faster in this environment.” In step with its performance, the company rewarded its investors with an interim dividend of 100 percent (Rs 5) on the par value of Rs 5 per share for the first half (April-September) of the current fiscal (FY 2007) as against 65 percent (Rs 3.25) on par value of Rs 5 per share in the same period of the previous fiscal (FY 2006).

For the third quarter (Oct-Dec), consolidated income is expected to be Rs 3,625 crore, representing a year-on-year growth of 43.2 per cent.  “We saw strong double-digit growth during the second quarter. Package (software) implementation, testing, consulting and business process management (BPM) services are growing fast,” said S. “Kris” Gopalakrishnan, Infosys joint managing director.

During this quarter, the company and its subsidiaries added 45 new clients, taking the total number of active clients to 476 as against 450 clients a year ago and 469 clients at the end of the previous quarter.  “The pricing environment continues to be stable with an upward bias,”  said SD Shibulal, head of sales.

Infosys announced it will offer 30 million sponsored secondary American Depository Shares (ADSs), which involves the conversion of Indian shares into US shares, in order to increase its float on the Nasdaq exchange. This will be the third offer of  sponsored ADSs by the software major.  The third issue will increase the float to 107 million ADSs or 19 per cent of the company’s total stock. Infosys will be in a position to raise about $ 1.5 billion through this offer, which helps domestic investors gain because ADS prices for the same underlying share command a premium in the US. With a float of 77 million ADSs at present, about 14 percent of the company’s total stock of  556 million Indian equity shares are traded on the Nasdaq at $50 per share.

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