MUMBAI: Shares of India's software industry bellwether Infosys Technologies
fell over four per cent on Wednesday, a day after it reported a 125 per cent
growth in net profit, on talk that a leading foreign brokerage had cut its
recommendation on the firm to hold from buy. At its lowest on Wednesday, the
share was down 4.7 per cent at Rs 5,645.50, before retracing to Rs 5,681 in
afternoon deals.
The stock, which has a weightage of around 13 per cent in the Bombay index ,
dragged the benchmark index down to the day's low of 4,061.83.
"It seems the brokerage is unhappy with the slow drop in dotcom exposure
and there is also concern that growth in net profit on adjusted sequential basis
is only 11 per cent," said the head of a foreign fund, with assets of Rs 12
billion under management.
The fund manager said he was quoting from the report, which was not made
available to Reuters. "There are also concerns in the brokerage report that
the company's net utilization has fallen to 77.6 per cent from the second
quarter's 80.5 per cent and 85.6 per cent in the first quarter," he said.
Infosys Technologies on Tuesday reported a 125 per cent year-on-year rise in
net profit to Rs 1.66 billion for the three months to December 2000. Total
income rose 136 per cent to Rs 5.52 billion in the same period.
The company said it could face pressure on revenue growth following its
decision to reduce exposure to fully Internet-based clients (dotcoms). Revenue
from these companies fell to 5.8 per cent of total revenue during the third
quarter compared with the 9.5 per cent in the second quarter.
"The report also expressed concern that the new client addition slowed
to 26 from the previous quarter's 27 and was well off the peak addition of 35 in
the last quarter of 1999-2000 (April-March)," the fund manager said.
(C) Reuters Limited 2001.