Infy cuts guidance as Re bites
Weighed down by a surging rupee, bigger pay cheques and spiraling visa expenses, Infosys Technologies announced a modest net profit of Rs 1,079 crore for the first quarter of 2007-08, a year-on-year growth of 34.5 per cent. The upshot: the infotech behemoth slashed its revenue guidance for 2007-08 to Rs 16,238-16,433 crore against the Rs 17,038-17,308 crore projected in April.
On an annualised basis, the year-on-year growth has been revised by 6 percentage points to 16.9-18.3 per cent from 22-24 per cent. The net income per share is expected to rise as much as 14 per cent year on year to Rs 79 in the year ending March 2008, falling behind the estimate of at least Rs 81 given in April.
The rupee’s appreciation is likely to dent the company's revenues to the tune of Rs 1,000 crore in 2007-08, with the first quarter itself witnessing a knock of Rs 287 crore, according to V Balakrishnan, Infosys CFO. "The sharp appreciation of the rupee against all major currencies impacted our operating margins during the quarter. However, our robust and flexible operating and financial model enabled us to maintain our net margins while absorbing the impact of the appreciating currency, higher wages and visa costs. Liquidity has been further strengthened with cash and cash equivalents reaching $1.6 billion, " he said in a statement.
The Bombay Stock Exchange Sensitive Index (Sensex) fell 0.66 per cent on Wednesday, led by losses in technology stocks after bellwether Infosys cut its earnings outlook. Shares in Infosys, India's second-largest software exporter, fell 4.5 per cent to Rs 1,929.70 their biggest percentage fall since April 2, when an unexpected interest rate rise had triggered a broad market sell-off. The Sensex lost 99.26 points to close at 14,910.62. The index had hit a record high on each of the previous seven days.
Announcing the company's performance during the first quarter at a news conference here on Wednesday, S Gopalakrishnan, CEO and managing director, said: "As clients recognise the strategic imperative of global sourcing in an increasingly flat business world, the demand for large end-to-end players like Infosys continues to be strong. We continue to focus on being a partner of choice to our customers."
The company recorded an income of Rs 3,773 crore for the first quarter, a year-on-year growth of 25.1 per cent. The earnings per share increased to Rs 18. 89 from Rs 14. 36 from the corresponding quarter in the previous year, the year on year growth being 31.5 per cent. For the second quarter, income has been projected at Rs 3,952-3,993 crore, a year-on-year growth of 14.5-15.7 per cent. It expects earnings per share of Rs 18.88.
During the first quarter, the company added 35 new clients to take the tally to 509.
The company, which had 75, 71 employees on its rolls, plans to hire 26,000 workers this financial year. The attrition rate has gone up marginally to 13.7 per cent in the first quarter from 11.9 per cent in the same quarter a year ago.