Infosys Technologies, India’s second largest software services exporter, on Tuesday reported a 9.2 per cent rise in quarterly profit and gave a confident medium-term outlook, despite a stronger rupee and concerns over a deepening financial crisis in the US — the biggest source of outsourcing orders.
The January-March numbers and the guidance for 2008-09 from Infosys, the bellwether stock for the software sector, cheered investors and sparked a rally among information technology stocks. That, in turn, helped lift the Sensex to its highest in two weeks.
Shares of Infosys, which also handed out a 400 per cent dividend, closed 6.2 per cent higher at Rs 1,510.80.
Meanwhile, Noida-based HCL Technologies that ranks fifth among software service exporters reported 3.2 per cent year-on-year growth in its quarterly profit.
The takeaway: India’s hugely profitable IT industry may be down, but not out. Year-on-year profit growth may have slowed sharply from last year, but it is still in double digits if one takes the dollar figures. Software companies have hired less than they wanted to, but they are still churning out jobs in tens of thousands for the country’s youth.
“While there could be short-term challenges due to global economic uncertainties, we see significant growth opportunities in the medium to long term,” Chief Executive S. Gopalakrishnan said.
Infosys said its revenue for the current year would grow 19-21 per cent to $4.97-$5.05 billion.
The projection may dwarf against the 35 per cent rise in the company’s revenue through past year, but it is still robust.
Moreover, Bangalore-based Infosys plans to hire 25,000 people this year and intends to give pay hikes in the range of 11-13 per cent compared with 15 per cent a year earlier, said Mohandas Pai, who heads the company’s HR practice.
“The company has managed to protect the margin in a challenging time.” Gopalakrishnan said.
He said, the company had cut back administrative expenses, reduced investment in subsidiaries and move more work to offshore sites in order to protect and improve upon the margin.
The company is also increasing its market outside US, in a bid to diversify in revenue sources. It also hedged up to $1.1 billion.
Net profit at Infosys rose to Rs 1,249 crore in the January-March period, the fiscal’s fourth quarter, from Rs 1,144 crore in the same period a year ago. For all of fiscal 2007-08, Infosys net profit rose to Rs 4659 crore, up 20.8 per cent on year.
Revenues in the latest quarter totaled Rs 4,542 crore, up 20.2 per cent from a year earlier. That took annual revenues for 2007-08 to Rs 16,692 crore, up 20.1 per cent on year.
“Considering the present state of global IT market, Infosys has managed to do well,” said Harit Shah, analyst at Angel Broking.
Software stocks have been hit the hardest since a deepening housing finance crisis in the United States began roiling stock market worldwide in mid-January.
On Tuesday, the IT index of Bombay Stock Exchange rose 5.6 per cent, as investors hope not to see much of a downside when other software services exporters report their earnings later this week.
“In a bearish environment, no bad news is good news,” said Amitabh Chakraborty, President of Religare Securitie
(With inputs from Venkatesh Ganesh in Mumbai and BR Srikanth in Bangalore)