Infosys profits jump

Infosys: Profits up

By Sanjeev Srivastava in Bombay

Indian software firm Infosys Technologies has announced a 49% jump in net profit to 1.9bn rupees ($ 40.5m) for the quarter ended 30 June.

The results announced in Bangalore showed that Infosys - India's second largest software exporter - was achieving better than the 30% growth predicted by chairman NR Narayan Murthy in April.

But Mr Murthy warned against any complacency.

"The economic environment continues to be challenging and companies around the world seek to realise higher returns on their technology investments," Mr Murthy said.

He said while the company was pleased with the growth rate achieved in the first quarter, the company was aware of the market realities and the pressure on its billing rates.

'Price pressure'

While maintaining a 30% growth projection for the remaining part of the year, Mr Murthy said there was "price pressure on the company and the market place continued to be challenging".

Mr Murthy should know. While a nearly 50% jump in profits is a job well done by any standards, it is not so by the exacting growth targets India's best known technology company has set for itself in recent times.

Year after year - through the better part of the past decade - the company recorded growth of at least 100%.

This quarter has for the first time seen a fall - of nearly 6 % - in the company's offshore billing rates even as the online rates have registered a modest rise of 1.2%.

Hiring down

One indication of the rather tough times the Indian software giant is facing comes from the number of employees hired in the quarter to end-June.

Just 116 employees were added to the Infosys team in the April-June quarter against the 921 hired in the previous quarter.

The total number of employees stood at 9,947 at end-June.

Infosys shares - which reached a dizzying 16,000 rupees at the height of the technology boom in early 2000 - closed flat on Tuesday at about 3,500 rupees.

This was despite the fact that the company predicts it will earn 25bn rupees this year compared with last year's 19.6bn.

'Not much of an upside'

According to Maulik Sharedalal, analyst and director of Bombay brokerage Kaji & Maulik Securities, Infosys' results are reasonably positive.

But he does not think the stock price will move up sharply in the near future.

"The problem is not with the result. Its pretty good under the global conditions of slowdown the company is operating in.

"But then there are no great positive surprises either and if the same growth rate is maintained in the remaining three quarters there is not much of a upside for Infosys stock from the current level which factors in a 30% growth rate," Mr Sharedalal said.