Ranjit Gangadharan

MUMBAI: Two of India's leading software services companies on Tuesday unveiled more than 100 per cent jumps in first half net profits, unaffected by indications of a slowdown in global technology spending.

The earnings were driven by buoyant e-commerce revenues and a stronger dollar, which boosted their income in rupee terms.

"Overall, it implies that the strength of the software business for Indian companies continues and the momentum is strong," said Motilal Oswal Securities analyst Mahesh Vaze.

Infosys Technologies Ltd., the first Indian firm to list on the US Nasdaq, posted a 122.3 per cent jump in net profit to Rs 2.81 billion ($60.9 million) in the six months ended September 30 from Rs 1.26 billion a year ago.

Total income jumped to Rs 8.36 billion from Rs 4.02 billion.

Net profit of Satyam Computer Services Ltd., India's fourth largest exporter of software services, leapt 107 per cent in the first half to Rs 1.17 billion from Rs 565.85 million.

Total income grew to Rs 5.25 billion from Rs 2.94 billion.

The firms earn more than 90 per cent of their income from exports. The rupee weakened by 5.3 per cent to the dollar in the six months to September 30, including a 3.0 per cent depreciation in the July-September quarter, compared to March 31.

Shares slide
The results beat market expectations but the companies’ shares found little support from investors as negative global sentiment to the tech sector weighed on the market.

Infosys, which has the heaviest weighting in the benchmark Bombay index .BSESN), closed 1.5 per cent down at Rs 7,288.7, off early gains of 1.1 per cent when the results were posted. The Bombay index also shed early gains to finish 2.7 per cent lower.

"The results are sexy but this is not the best of times," a dealer at one foreign brokerage said. "Everyone's over-exposed to the software sector. We need new funds."

Satyam shares closed 4.2 per cent down at Rs 468.70, before the results were released.

"Weak trading sentiment is unlikely to help Satyam shares," said Advani Share Brokers director Pashupati Advani.

Infosys managing director Nandan Nilekani saw no prospect of his firm being hit by warnings from global tech firms such as Intel Corp and Dell Computer Corp.

"We have a diverse basket of customers and long-term relationships with our clients with a very high level of repeat business," he told analysts over television network, CNBC India.

"We get involved with the budget plans of our customers, we understand their sales cycles...all that is factored into our plans," he said.

The company makes software for large global corporations to enable them to do business on the Internet, by utilizing India's vast pool of skilled manpower to produce products at competitive rates.

E-commerce revenues rose to 31.4 per cent of total revenues during the second quarter from 10.3 per cent in the year-ago period.

Earnings upgrade
"The results are pretty impressive with average per employee revenue up 12 per cent in dollar terms over the preceding quarter," said SG Asia Securities analyst Yeshwant Kini.

"We continue to be positive on the stock. We maintain our buy," he said.

Kini said he was likely to upgrade his earnings forecast for the full year after the first half results beat expectations, and because the outlook was bright.

Software analyst at Sundaram Newton Asset Management in Chennai, Srividya Rajesh, was also upgrading estimates.

"We are raising our estimates for the full year and we can now expect a 125 per cent year-on-year growth in bottomline and over 100 per cent in topline," she said.

Satyam Computer, which owns about 55 per cent of the Nasdaq-listed Internet firm Satyam Infoway, sees good business potential from electronic commerce products.

Internet and e-commerce contributed to 27.1 per cent of total revenues for the second quarter against 15.4 per cent in the year-ago quarter.

"As companies continue to enlarge the scope of applications involving the Internet and the Web to cover more areas of their operations, the definition of what comprises e-commerce is undergoing change," managing director B Rama Raju told Reuters.

Satyam added 35 new clients in the second quarter, including US Internet healthcare firm Healtheon/WebMD Corp, Citibank Singapore and Denso.

The company, which last week got government approval to issue up to $310 million of American Depositary Shares, is expected to announce details of the issue shortly. ($=46.18 Indian Rupees).

(C) Reuters Limited 2000.