Infosys results Q2 2012 profit up 24%

Infosys,India’s second largest IT services exporter logs rise in profit - shares fall 8.8%.

Written by FeBureau | Bangalore | Published: October 12, 2012 9:06:27 am

Infosys results Q2 2012: Infosys,India’s second largest IT services exporter reported a 24% rise in net profit for the second quarter ending September 30,2012. The company posted a net profit of Rs 2369 crore as compared to Rs 1,906 crore in the corresponding period a year ago.

Infosys results July 2012 revenues for the second quarter ending September 30,2012 rose by 22%. The company reported a revenue of Rs 9,858 crore as compared to Rs 8,099 crore in the corresponding period a year ago.

After plunging as much as 8.8%,Infosys shares recouped losses after company clarified that the revenue growth forecast for the current fiscal year that ends in March 2013 does not include revenue from Lodestone Holding AG.

COMMENTARY

ANKUR RUDRA,ANALYST,AMBIT CAPITAL,MUMBAI

The numbers are quite disappointing. The company continues to lag its peers. The departure of the CFO will continue to be an overhang on the stock in the near term,although he is not leaving the company. The cut in EPS guidance is specially disappointing.

DIPEN SHAH,HEAD OF PRIVATE CLIENT GROUP RESEARCH AT KOTAK SECURITIES,MUMBAI

Earnings and revenue guidance is slightly disappointing,on the volume growth the company has done well.

We had expected some higher guidance because of Lodestone acquisition,that has not come,we need to see what are the reasons behind that.

ANKITA SOMANI,ANALYST,ANGEL BROKING,MUMBAI

Operating margins have declined. The lower dollar revenue guidance even after Lodestone acquisition means their business is under pressure. Management changes are additional negatives too.

NILESH SHETTY,PORTFOLIO MANAGER,QUANTUM ASSET MANAGEMENT COMPANY,MUMBAI

You have had a clear divergence in performances in other large (IT companies) versus Infosys. Our analysts met them (IT companies) last week and they have given such a bullish outlook in terms of longer term view; there seems to be some company specific issues with Infosys,whether they are redoing their strategy or there is a succession issue.

Our view is even if growth is an issue (for the IT industry) say in the near term,valuations have already factored that in.

KISHOR P. OSTWAL,CHAIRMAN,CNI RESEARCH,MUMBAI

The numbers are in line but not the guidance. I think Infosys stock will correct by at least 5 percent.

On the sector guidance… I think most of the analysts are now becoming negative on the IT sector.

G. CHOKKALINGAM,EXECUTIVE DIRECTOR & CHIEF INVESTMENT OFFICER,CENTRUM WEALTH MANAGEMENT,MUMBAI

I have been selling the stock and it’s the best time to come out of the stock because the revenue growth in dollar terms is stagnating.

Base effect and expected rupee appreciation would further add to the pressures.

R.K. GUPTA,MANAGING DIRECTOR,TAURUS ASSET MANAGEMENT CO.,NEW DELHI

Having maintaining their revenue guidance is itself a big achievement for Infosys looking at the global scenario.

I think the hard work is over for Infosys,since the U.S. economy is showing signs of improvement and a lot of changes are happening within Infosys itself.

KAWALJEET SALUJA,EXECUTIVE DIRECTOR,KOTAK INSTITUTIONAL EQUITIES,MUMBAI

This is disappointing.

Stocks More on Infosys

Company INFO More on Infosys

US dollar / Indian rupee largely steady at open; factory data awaited

* USD/INR steady at its previous close of 52.6850/6950 as a steady euro prevents any gains in the pair while losses in domestic shares limit a major fall. The pair has moved in a band of 52.5550 to 52.73 so far in the session.

* Shares in Infosys,India’s No. 2 software exporter,fall over 8 percent after the company’s revenue growth forecast for the fiscal year failed to meet market expectations.

* The euro rises slightly after snapping a three-day decline the day before when the International Monetary Fund said indebted euro zone economies should have more time to cut budget deficits.

* Traders see a 52.50 to 53 range on the pair until the factory output data due around 11 a.m.

Infosys Q2 2012 profit up 24 pct; meets estimates

(Reuters) Infosys Ltd,India’s second-ranked software services provider,reported a 24 percent gain in quarterly profit,as European firms come under pressure to shift more backroom functions offshore to keep their costs in check.

The information technology bellwether caught analysts on the hop in July when it cut its annual sales forecast more deeply than expected – as global economic uncertainty hit tech spending – but its shares have risen by a fifth since its lows that month,beating gains of 13 percent on the benchmark Sensex stock index and nearly 9 percent by market leader Tata Consultancy Services.

Profit at Infosys,whose clients include Bank of America ,Volkswagen and GlaxoSmithkline,rose to 23.7 billion rupees ($450 million) for the quarter that ended September,from 19.06 billion rupees a year earlier.

July-September net profit was forecast at 23.8 billion rupees ($448 million),according to data. Profit in the previous quarter grew 33 percent from a year earlier.

The recent stock rally has come as investors see some signs of stability for the global economy and hope for an uptick in demand,though the International Monetary Fund this week warned that the United States and Europe could slide back unless they resolved their debt troubles.

IMF head Christine Lagarde has blamed Europe and the U.S. – the mainstays of India’s $100 billion software and services outsourcing industry – for companies putting off investment and hiring.

MAINTAINS REVENUE FORECAST

The company said it expects revenue growth of at least 5 percent for the fiscal year,maintaining its previous outlook. Infosys cut its view for earnings per American Depository Share to at least $2.97 from $3.03,adjusting it for the currency exchange rate.

Analysts had predicted Infosys,which has a market value of around $26 billion,will revise its revenue growth estimate to around 6 percent for the year to end-March,boosted by its acquisition last month of Swiss consultancy Lodestone. In July,the company cut that forecast to 5 percent from its April estimate for 8-10 percent growth. Excluding Lodestone,Infosys’ legacy business is expected to grow slightly less than that 5 percent estimate.

Infosys agreed to pay about $350 million – its biggest buy to date – for Lodestone,a specialist in advising companies such as BMW AG and Roche Holding AG on how best to use SAP AG’s business management software.

They want to be the Accenture of India’s IT industry,said P. Phani Sekhar,a fund manager at Angel Broking in Mumbai,which owns Infosys stock. He was referring to the U.S. consulting and outsourcing group that is a major global rival.

For now,though,Infosys has to compete for orders in the more commoditised sectors of maintaining computer systems,software applications and helpdesk support. Rivals TCS and HCL Technologies have aggressively chased such contracts.

TCS is due to report its July-September results on Oct. 19.

Infosys,which has seen a slew of management changes in the last couple of years,said its chief financial officer V. Balakrishnan would give up his position from Oct. 31 and will be replaced by vice president finance Rajiv Bansal.

Balakrishnan will,however,continue to be on the company’s board.

Partha Iyengar,Gartner’s top analyst in India said this week there were strong indications that software services providers would outperform the industry estimate this year. The National Association of Software and Service Companies (NASSCOM) has estimated exports will rise 11-14 percent in the year to March – down from 16 percent last year and about 30 percent before the global financial crisis.

I’m leaning towards … we’re actually going to outperform the NASSCOM estimates in terms of IT services growth,Iyengar told reporters by phone from a symposium in Goa,southwest India.

Iyengar said there was a clear drive to reduce the cost of IT,the traditional cost of running a business. That’s the sweet spot the Indian players have played in for a long time,he said.

($1 = 53.1350 Indian rupees)

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