Healthy profit for India's Infosys, but still caution

The company posted a 33 percent rise in consolidated quarterly net profit ending December, but bosses were guarded about the full-year revenue outlook because of the uncertain global environment.

"By mid-February we expect to know the budgets for overseas clients and our assessment is that it will be slightly less or flat," chief executive S. Gopalkrishnan told a news conference at the firm's Bangalore headquarters.

But he said off-shoring opportunities would increase in the coming months and expected a revival in investor sentiment by early 2010.

The earnings news was a chink of light in an otherwise dark week for the Indian IT sector, after a fraud scandal erupted at Satyam Computers and the World Bank suspended dealings with Wipro and Megasoft on transparency issues.

Net profit for Nasdaq-listed Infosys rose to 16.41 billion rupees (338 million dollars) during the three months to December, up from 12.31 billion rupees a year earlier, it said in a statement.

Revenue rose 35.4 percent to 57.86 billion rupees.

Under US accounting standards, Infosys showed a 6.4 percent rise in net profit of 332 million dollars from 312 million dollars the previous year, as revenues rose eight percent to 1.17 billion dollars.

Gopalkrishnan said earlier in a statement to the Mumbai stock exchange that the company aimed to "create value for clients" during the ongoing downturn in order to emerge stronger when it ends.

Full-year guidance was cautious, with Infosys expecting revenues to touch between 4.67 and 4.71 billion dollars, a growth of 11.8 to 12.8 percent.

Infosys closed up 64.2 rupees or 5.55 percent to 1,220.8 at the Mumbai stock exchange.

Chief financial officer V. Balakrishnan said quarterly operating margins rose because of the depreciation of the rupee, which dropped nearly nine percent against the dollar, to 48.4 in the three months to December.

India's software firms benefit from a weaker rupee as they bill most of their US-based clients in US dollars.

Infosys added 30 new clients during the quarter, and saw a net addition of 2,772 employees in the same period.

Infosys had 103,078 employees as of December-end.

Analysts said Infosys' earnings were ahead of expectations, adding that a cautious outlook was likely due to an uncertain US economic environment.

"The Infosys numbers were well ahead of expectations. We expect revenue and earnings growth to slow down for the year, due to the global uncertainty," said Sanjeev Prasad, head of research with Kotak Securities.

"US-based clients have yet to finalise their IT budgets, clarity on which will emerge in 2-3 months time," he said.

"The (Infosys) earnings were sound, nothing to be alarmed about. Region-wise revenue growth will be a challenge and needs to be studied," said Hitesh Agrawal, head of research with Angel Broking.