Infosys fails to impress investors

BANGALORE: Software maker Infosys failed to delight investors as it reported a 18.4 per cent rise in net profit for the second quarter, which saw its revenue cross the $ 1-billion mark.

The country's second largest software exporter said it earned a net profit after tax of Rs 1,100 crore for the quarter ended September 30, 2007 on the back of new clients and higher operating margins despite a rising rupee.

Announcing the Q2 consolidated results, Infosys Tehnologies Ltd CEO and MD S Gopalakrishnan said: "We have achieved another milestone by crossing one billion dollars in revenues this quarter".

Income was Rs 4,106 crore for the second quarter registering a year-on-year growth of 19 per cent. Earnings per share increased to Rs 19.26 from Rs 16.75 for the corresponding quarter in the previous year, clocking a y-o-y growth of 15.0 per cent.

Shares of the company, however, dropped by Rs 148.55 to Rs 1,976.00 reflecting investors' disappointment with the earnings.
The results had a cascading effect on other IT shares, resulting in a hefty fall of 282.28 points or 5.59 per cent in the BSE IT Index.

"Our operating margins improved during the quarter despite the appreciating rupee", said V Balakrishnan, CFO, Infosys. "We are proactively hedging our currency exposures to mitigate this impact. Our hedging position as of September 30, 2007 was 1.4 billion dollar,” he added.

The company is confident of absorbing the Rs 2,000 crore revenue loss for the fiscal year 2007-08 due to appreciation of rupee. "Our unique business model will help us to maintain margins", said Gopalakrishnan. Infosys also announced an upward revision of its annual guidance for the year to 34.5 - 35 per cent.