Infosys has once again done what it does best posting
impressive results. The company has earned a net profit
after tax of Rs 225.8 crore in the second quarter of 2002-03,
against Rs 201.56 crore clocked in the corresponding quarter
of the previous year. The total income has risen to Rs
879.57 crore (Rs 650.13 crore).
income from software services and products from overseas
operations was 34.3 per cent higher year on year at Rs
857.2 crore; it was 88.4-per cent higher year on year
from domestic operations at Rs 22.3 crore.
has also raised its estimate for the year ending 2003,
a distinct sign that happy days are here again. Knowing
Infosys, one can be sure that they will achieve or even
surpass the revised estimates. The question is, does this
spell the revival of the once-vigorous IT industry, or
are the results only company-specific? The stock markets
initial reaction surely indicates that good times are
here for the industry. Technology stocks surged ahead
after hearing Infosys results.
managing director Nandan Nilekani says: In the world
market, while there is cost pressure and uncertainty,
the Infosys business model of customer focus, with its
value proposition and delivery capabilities with increased
acceptance of offshore outsourcing model, has accelerated
revenue growth beyond our initial projections
have increased our guidance for fiscal 2003.
The company expects increased off-shoring opportunities,
given 260 new projects and 18 new client acquisitions,
including Porsche AG, Commonwealth Industries and Vcommerce,
during the quarter. While the initial stages of
the projects will see more onsite activities, once it
gets under way we will try to increase offshore content
in these projects, explains Nilekani.
the EPS increased from Rs 30.47 to Rs 34.1 this quarter,
an interim dividend of 250 per cent was declared. During
the quarter, the onsite-offshore mix was 54.6:45.4 compared
to 52.7:47.3 in the previous quarter. The company continues
to face pricing pressure, says Nilekani. As long
as the onsite mix remains higher (with low margins), the
earnings margins cannot increase further.
companys repeat business decreased to 94.9 per cent
compared with 98.5 per cent during the first quarter of
fiscal 2003. While business from North America increased
to 73.8 per cent, up from 72.3 per cent last quarter,
European business declined to 16.5 per cent compared to
19.3 per cent during Q1 of FY03.
from the telecom sector slid further to 14.6 per cent
of its revenues during the second quarter compared to
15.2 per cent recorded the previous quarter. The
telecom sector is not expected to perform well over the
next few quarters. We have been affected by the adverse
business of clients and in the US the telecom sector has
overspent in broadband and other technologies, which will
take some time to rectify. In the meantime, Infosys will
be discriminating in choosing telecom clients, says
Infosys head (worldwide sales) and senior vice-president
Consultancy services have picked up steam with an increase
in revenues of 9.7 per cent compared to 8.1 per cent last
quarter. Growth is also expected from consultancy, the
enterprise sector and packaged implementation. Progeon,
the business process outsourcing subsidiary, has bagged
one new client (total three clients) with 287 employees
and revenues of Rs 2 crore for this quarter.
to step up growth, Infy has incentivised sales and is
embarking on aggressive sales and marketing activities.
The IT firm has provided an aggregate amount of Rs 23.76
crore towards strategic investments during the quarter.
Technologies performance led the rally in major
IT scrips. The Infy stock emerged as the top gainer in
the Bombay Stock Exchange (BSE) 30 Sensex and BSE technology
index. On 10 October 2002, punters had pushed up the stock
by 4.6 per cent (Rs 160) to close the day at Rs 3,634.8
after touching a high of Rs 3,650 during the day.
and analysts say Infosys has outperformed market expectations
with its performance for the second quarter ended 30 September
2002. The buoyancy has percolated to other IT companies
like Wipro, HCL Technologies and NIIT. But institutional
selling pulled down Satyam Computers. Wipro spurted 1.81
per cent to close at Rs 1,352.6, HCL Technologies gained
1 per cent to close the day at Rs 200.35 and NIIT surged
2.45 per cent to close the day at Rs 133.85.
technology counters like Visualsoft, Information Technologies,
Rolta, Mphasis BFL, Hughes Software and Pentasoft also
figured in the top 10 gainers in the BSE IT index to close
with gains in the region of 1-5 per cent. NIITs
alliance with the US-based Sabre Holdings and excellent
results from Mphasis also added to the feel-good factor.
performance has infused a fresh lease of life into an
otherwise listless market. The market was looking for
some news to ride on and the results have provided just
that. The show is fairly decent and it has virtually cut
down the downside risk in the stock to a large extent.
But one has to wait for the results of Wipro and Satyam
to see whether there can be an uptrend on technology counters.
hope for the best.