India's Infosys Q4 profit up, but below forecasts

Apr 15, 2011

India's second-biggest outsourcer Infosys said on Friday quarterly net profit jumped nearly 14 percent but the company's shares tumbled as the figures lagged market expectations.

Consolidated net profit in the three months to March rose 13.7 percent year-on-year to 18.2 billion rupees ($408 million), said in a statement, below market forecasts of 18.8 billion rupees.

Analysts called the performance, which kicked off the quarterly corporate earnings season, disappointing and blamed it on higher costs that hit margins.

"We expect the demand environment to be normal this year for the industry," said chief executive S. Gopalakrishnan, adding the company had boosted investment "to take advantage of the opportunities we see in the market."

US and other foreign firms, drawn by India's English-speaking workforce and lower costs than in the West, have farmed out a wide range of jobs from answering bank client calls to processing insurance claims and equity analysis.

Revenues of the Nasdaq-listed company, viewed as an Indian technology bellwether, climbed 22 percent to 72.50 billion rupees in the fourth quarter of the financial year ending March 31, 2010.

Analysts had expected revenues to increase 25 percent.

Infosys shares were down 8.24 percent at 3,033.60 rupees on the Bombay Stock Exchange in early afternoon amid reports analysts might downgrade the stock after the earnings figures.

"Overall earnings were not attractive. Operating margins were affected by rising staff costs," said Sanjeev Hota, an analyst at Mumbai-based brokerage Sharekhan.

However, Motilal Ostwal Securities noted the fourth quarter was "seasonally the weakest" for the industry as clients finalise their budgets and temporarily curtail spending.

News that one of the company's key board directors, Mohandas Pai, had decided to step down also undermined investor sentiment.

Infosys, founded by seven entrepreneurs three decades ago with an investment of just $250, said Pai "has much bigger projects in the horizon".

"Mohan has been an early adopter and a keen anchor builder of Infosys," Infosys chairman N.R. Narayana Murthy added.

The company -- whose market guidance is generally considered conservative -- forecast revenues of between $7.13 billion and $7.25 billion in the current fiscal year, up 18-20 percent from the previous year.

It also hiked its share earnings forecast by eight to 10 percent.

Explore further: Ticketfly buying WillCall for on-premise data

add to favorites email to friend print save as pdf

Related Stories

India's Infosys posts profit dip on slowdown

Apr 15, 2009

India's Infosys Technologies said Wednesday its consolidated net profit for the fiscal fourth-quarter rose 29 percent from a year earlier, but fell sequentially due to the global slowdown.

India's Infosys quarterly profits disappoint

Jul 13, 2010

India's second-biggest software exporter Infosys announced Tuesday a surprise 2.4 percent fall in first quarter consolidated net profit but raised its revenue outlook for the full year.

Wipro posts 9.7 percent profit rise, below forecast

Oct 22, 2010

India's third-biggest software firm Wipro reported Friday a lower-than-forecast 9.7 percent rise in quarterly net profit, blaming a higher rupee and wage costs for the disappointing earnings.

Recommended for you

Ticketfly buying WillCall for on-premise data

13 hours ago

Ticketfly Inc., a San Francisco-based technology company among several posing a challenge to Ticketmaster, is acquiring WillCall Inc., a crosstown rival that turns your smartphone into a mobile wallet at live events.

HP revenue inches up after years of decline

Aug 20, 2014

Hewlett-Packard on Wednesday reported that its quarterly revenue rose for the first time in three years, nudged by improved computer sales everywhere except Russia and China.

Restaurants experimenting with pay-in-advance tickets

Aug 20, 2014

With restaurant patrons increasingly jumping on the Internet to make reservations, some high-end eateries here and across the country are adding a new tech wrinkle: having their clientele pay for their meal in advance using ...

Chip maker Infineon to buy California firm for $3B (Update)

Aug 20, 2014

German chip maker Infineon Technologies AG says it has agreed to pay $3 billion in cash for California-based semiconductor firm International Rectifier, which produces power-management components used in everything from cars ...

User comments : 0