Infosys returns to double-digit growth, ups guidance again

BANGALORE - Returning to double digit growth in net profit and revenue during the second quarter (July-Sep), India’s second largest IT bellwether Friday revised revenue guidance for this fiscal (2010-11) again.

Consolidated revenue for fiscal 2011 will be around Rs.270.58 billion (Rs.27,058 crore), an increase of 19 percent year-on-year (YoY) and 1.7 percent higher than it projected in July (Rs.267 billion/Rs.26,663 crore), as per the Indian accounting standard.

Under the International Financial Regulatory System (IFRS), revenue is expected to be $6 billion, an increase of 25 percent YoY and five percent higher than its July projection of $5.8 billion.

Posting robust growth in the second quarter under review (Q2), the company’s net profit at Rs.1,737 crore (Rs.17.37 billion) grew 13.2 percent YoY and 16.7 percent sequentially as per the Indian accounting standard.

Similarly, consolidated revenue grew 24.4 percent YoY and 12 percent sequentially to Rs.6,947 crore (Rs.69.47 billion) as per the Indian accounting standard.

Under the International Financial Regulatory System (IFRS), net income at $374 million is up 18 percent YoY and 14.7 percent sequentially, while gross income at $1.5 billion is up 29.6 percent YoY and 10.2 percent from the previous quarter (April-June).

Though the economic environment continues to be challenging, we have leveraged our client relationships, solutions and investments to grow faster in this (second) quarter, Infosys chief executive S. Gopalakrishnan said in a statement here.

Guidance for the third quarter (Oct-Dec) is projected to be Rs.6,919 crore (Rs.69.19 billion), a YoY growth of 21 percent as per the Indian accounting standard

Under the IFRS, gross income for this quarter (Q3) is likely to be $1.6 billion, an increase of 26 percent YoY.

There are significant drivers for investment in information technology (IT), as any transformation programme to ‘build tomorrow’s enterprise’ requires these investments to be made. We are partnering with our clients on these initiatives, Gopalakrishnan noted.

Addition of 27 clients during the quarter by the company and its subsidiaries was less sequentially from 38 in the first quarter (April-June) and 35 year ago though active client base has gone to 592 from 590 in last quarter and 571 year ago.

Our portfolio of service and our enhanced focus on solutions as well as new engagement model are providing a compelling value proposition to our clients, chief operating officer S.D. Shibulal said.

As a festival bonanza, the company declared 200 percent interim dividend of Rs.10 per share and a whopping 300 percent special dividend of Rs.30 per share of Rs.5 at par value for its 30th year to all its investors, with Oct 22 as record date for the payment.

The interim dividend, however, is flat year-on-year.

Our operating margins improved marginally during the quarter, while our cash reserves increased to $3.9 billion from $.3.4 billion in the previous quarter (April-June), chief financial officer V. Balakrishnan said.

The company and its subsidiaries added 14,264 employees for the quarter, taking the total strength of its workforce to 122,468 as on Sep 30.

With the exit of 6,618 employees, the net addition was 7,646 in the quarter under review.

We have seen record hiring this (second) quarter and attrition has decreased. Our new career architecture is showing positive results, board member and head of HRD and education and research T.V. Mohandas Pai said.

Though the volume growth remains stronger with greater traction in financial services and retail, Balakrishnan admitted that the continued global economic uncertainty, coupled with extreme currency volatility was a concern for the industry.