Infosys Q2 profit up, cuts revenue outlook
Bangalore, October 12, 2011
Infosys, India's No 2 software services exporter, met forecasts with a 9.7-percent rise in second-quarter profit as a weak rupee boosted margins, but it cut its full-year revenue outlook and warned about global economic uncertainty.
Infosys, which counts Goldman Sachs, BT Group and BP among its main clients, cut its dollar revenue growth forecast from 17.1 percent to 19.1 percent for the fiscal year, from the 18 percent to 20 percent projected earlier.
"The global macroeconomic environment is still uncertain. It is and should be a concern for the IT industry," S D Shibulal, chief executive officer of Infosys, said in a statement.
India's $76 billion showpiece IT sector, which feeds off increased outsourcing by companies looking to cut costs, is expected to face pricing pressure and a decline in new orders as Europe struggles with a debt crisis and the United States sees an economic slowdown.
More than half of Bangalore-based Infosys' revenue is generated in the United States. Europe is its second largest market.
Infosys, also listed in New York, said on Wednesday that consolidated net profit rose to 19.06 billion rupees ($387 million) for the fiscal second quarter ended September 30, from 17.37 billion rupees reported a year ago.
Revenue rose 16.6 percent to 80.99 billion rupees, as the firm added 45 clients in the quarter.
A Reuters poll of brokerages had forecast a profit of 18.91 billion rupees on revenue of 81.20 billion rupees for the company.
Infosys shares rose by more than 5 percent following the news on Wednesday, touching 2630.20 rupees a share.
"The results have been helped partly by the depreciation in the rupee. The main thing to watch out for will be how the US and Europe will move in the coming months," said R K Gupta, managing director at Taurus Asset Management.
"But Indian IT companies and Infosys in particular have a cost advantage over their global peers. I am not very pessimistic about these companies," he said.
Infosys, worth about $29 billion, has lost more than a quarter of its market value this year, roughly in line with a 25 percent fall in the sector index, but higher than a 19 percent decline in the Mumbai market index. ($1 = 49.3 rupees) – Reuters