Infosys Technologies Q1 profit seen rising 80-100 pct
REUTERS

JULY 9: India's market favourite computer software firm Infosys Technologies Ltd is likely to post year-on-year earnings growth of 80 to 100 per cent for the first quarter ended June 30, analysts said.

A rise in new orders during the quarter, particularly in the high-margin E-commerce area, and significant income from exchange rate fluctuations are expected to boost the bottomline.

"Growth at Infosys has been exceptional. The fact that they have ramped up their recruitment reflects that they have got good orders," said Sanjay Puthran, analyst at Dil Vikas Finance Ltd.

He estimated Infosys would unveil a net profit of Rs 1.23 billion ($27.5 million) on revenues of Rs 3.13 billion. Infosys, which is also listed on the U S Nasdaq, is scheduled to release the results on Tuesday.

It posted a net profit of Rs 606.1 million on a total income of 1.84 billion during the first quarter of 1999/2000 (April-March).

However, analysts said Infosys's share price is unlikely to rise much on the results because strong earnings growth has already been factored in.

Its shares closed Rs 28.80 higher at 8,483.05 at the Bombay Stock Exchange on Friday. The stock has gained 51.5 per cent since hitting its year low of Rs 5,600 on May 29 but is still off 38.5 per cent from its peak of 13,812.90 on March 8.

"The share price will hover around current levels," an analyst at a British securities firm said. "I don't see it falling below Rs 7,600 or going above 10,000 in the short-term."

At Friday's closing price, the stock was trading at a price earnings multiple of 119 on estimated 2000/01 earnings of Rs 71.5 per share, he said.

He said the share price has not factored in the significance of the company's aggressive hiring. Analysts said that Infosys had added 500-800 employees during the quarter, a strong indicator of business growth.

Vijay Bhayani, senior investment analyst at ASK-Raymond James India Securities, said Infosys had during the quarter increased the number of employees who directly contribute to revenues through business projects compared to those undergoing training.

"Though there are costs associated with hiring new employees, the substantial depreciation of the rupee during the period will absorb this cost," he said.

The Indian rupee depreciated by 2.4 per cent against the dollar in the quarter, from Rs 43.60 per dollar on March 31 to 44.67 on June 30.

Analysts estimate exchange rate fluctuations would boost Infosys's bottomline by five to six per cent in the first quarter.

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