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Infosys Q1 Net Profit Rises 32%; Cuts FY 13 Forecast

Kashmir Times. Dated: 7/13/2012 12:57:38 AM

Bangalore, Jul 12(Agencies): Infosys today reported a 32.92 per cent jump in net profit to Rs 2,289 crore in Q1, but failed to enthuse the market due to sharp cut in dollar revenue guidance amid a volatile global economic environment.
Its revenue was up 28.47 per cent to Rs 9,616 crore in the first quarter of current fiscal, but in dollar terms the growth was just 4.8 per cent at USD 1,752 million.
While the company exceeded its revenues forecast in rupee terms, it failed to meet dollar revenue guidance of USD 1,771-1,789 million for the quarter.
The company's net profit had stood at Rs 1,722 crore in the April-June quarter of 2011-12.
The street did anticipate Infosys to revise its FY'13 revenue outlook downwards, but the sharp reduction to five per cent as against growth estimates of 8-10 per cent sent the scrip tumbling 8.27 per cent to Rs 2,262 at the BSE in late afternoon trade.
The company attributed the revision to cross currency fluctuation and current business environment. The outlook is much weaker than industry body Nasscom's estimate of 11-14 per cent growth for the sector in FY'13.
"We lost USD 13 million because of currency and we also took a one time write-off (of USD 15 million) in accrued revenue as a matter of prudence on a large transformational programme which got cancelled this quarter in Europe. This is a one time event and the client is still with us," Infosys MD and CEO S D Shibulal added.
Infosys said for now it is suspending the practice of giving guidance citing "lack of clarity" in the demand environment.
Often considered a bellwether, especially for its practice of providing revenue guidance, Infosys has been struggling to meet its own forecast in the last few quarters.
"These are below estimates results. The forecast is much lower than what it had predicted earlier. For the last 6-7 quarter, the company's guidance has not been up to mark," Ashika Stock Broking Research Head Equities Paras Bothra said.
"We are definitely living in a very volatile environment. Consumer confidence has come down. Gartner report says IT spending growth has been cut down to 3.1 per cent to 1.3 per cent while TPI index says 35 per cent of the large deals have been taken off the table in Q1," Shibulal said.
"Hence for the time being we have taken a decision to give away only yearly guidance of at least 5 per cent growth (for FY13) and not have a quarterly guidance for the time being," Shibulal said adding the practice will resume when economic environment stabilises.
Weak global economic climate and reduced IT budgets, along with sharp currency fluctuations, have slowed the pace of growth of Indian software companies.
As of June 30, 2012, Infosys' cash and cash-equivalents, including investments in available-for-sale financial assets and certificates of deposit and government bonds, stood at Rs 20,596 crore, as against Rs 16,969 crore as of June 30, 2011.
On acquisitions, Infosys Member of the Board and Chief Financial Officer V Balakrishnan said the company is "seriously looking" at various options.
Infosys, which has Goldman Sachs, BT Group and BP Plc among its clients, added 51 new clients during the quarter.
At the end of June 30, the company had 1,51,151 employees, including 9,236 (gross) and 1,157 (net) new staff inducted during the first quarter.