Rosemary Arackaparambil
MUMBAI: Infosys Technologies Ltd., India's second-largest software exporter,
is seen posting nearly flat profit and sales for July-September, a far cry from
its turbo-charged rates of growth up to April.
Nasdaq-listed Infosys announces its results on Wednesday.
A Reuters poll of 14 brokerages released on Tuesday showed a median net
profit forecast of Rs 1.94 billion ($40.30 million), up only 1.88 per cent from
the April-June quarter and by 25.71 per cent from a year ago (to see poll, click
on ).
Net sales were estimated at Rs 6.29 billion, up just 0.46 per cent from the
previous quarter and by 35.05 per cent from a year earlier.
Infosys, whose nearly 9,000-strong workforce provides software services to
several Fortune 500 companies, had forecast revenue of Rs 6.25 billion-6.4
billion for the September quarter, an estimate it kept unchanged even after the
September 11 attacks on the United States.
The Bangalore-based company cautioned in April that revenue would grow only
30 per cent this year - after doubling in past years - because of the slowing
economy in its main market of North America.
And after the April-June first quarter, it indicated billing rates were under
pressure and said business from the network equipment, asset management and
investment banking sectors, where it has some key clients, was badly hit. Key
clients include Internet equipment maker Cisco Systems and telecom equipment
maker Nortel Networks .
Few new clients
Goldman Sachs said on Monday that billing rates may have fallen 3-5 per cent
during the quarter and the addition of new clients probably slowed. In the
April-June quarter, Infosys added 26 new clients, down from a record 37 the
previous quarter.
Goldman also estimated Infosys' operating profit margin narrowed to 30.2 per
cent in the past quarter, from 32.5 per cent in the quarter ended June. But
Goldman said Infosys' deferral of new recruits, salary increases and tighter
control on general expenses would help offset the impact.
The bottomline was also probably sweetened a bit by currency factors,
analysts said.
The Indian currency was down 1.7 per cent against the US dollar by end
September compared to end June, after falling as much as 2.87 per cent to a
record low of 48.43 per dollar at one point. "We believe that the rupee
depreciation will help the company in the current scenario," said an
analyst with a domestic brokerage who did not want to be named.
"Further depreciation will add directly to the company's bottomline,"
he said.
(C) Reuters Limited 2001.