Infosys again ups fiscal guidance on double digit growth (Second Lead)

BANGALORE - Infosys Technologies Ltd Thursday once again revised its revenue guidance upwards for fiscal 2010-11 on strong double-digit growth of 24 percent year-on-year during the October-December third quarter.

Consolidated revenue for the fiscal is expected to be Rs.27,445 crore (Rs.274.45 billion/$6.05 billion), projecting 21 percent year-on-year growth, according to the Indian accounting system.

The fresh guidance is 1.4 percent higher than the previous projection of Rs.27,058 crore (Rs.271 billion) made in October 2010 and around nine percent higher than Rs.25,015 crore (Rs.250 billion) given in April 2010.

Infosys chief executive S. Gopalakrishnan, however, sounded cautions on the company’s performance due to uncertainty in the economies of the developed markets.

“The weaker economic recovery in developed markets, coupled with high unemployment and risk of sovereign default, could impact industry growth,” Gopalakrishnan said in a statement here.

Under the International Financial Regulatory System (IFRS), gross income for this fiscal is expected to be $6.05 billion or 26 percent up year-on-year, which is higher than $5.6 billion projected in April for this fiscal.

The global software major posted a net profit of Rs.1,780 crore (Rs.17.8 billion) for the third quarter, registering 14.2 percent year-on-year growth and 2.5 percent sequentially from the second quarter, according to the Indian accounting standard.

Similarly, consolidated revenue at Rs.7,106 crore (Rs.71.06 billion) grew 24 percent year-on-year and 2.3 percent sequentially from second quarter of July-September.

Under IFRS, net income grew 19 percent year-on-year and 6.1 percent quarter-on-quarter to $397 million and gross income by 29 percent year-on-year to $1.6 billion.

“We are closely working with our clients as they fine tune their strategies for the future,” Gopalakrishnan said.

Buoyed by higher realisation than its forecast of Rs.6,919 crore (Rs.69.19 billion) for the third quarter, the company has projected Rs.7,194 crore (Rs.71.94 billion) for the fourth quarter (January-March), which will be 21 percent year-on-year growth, according to the Indian accounting system.

Under IFRS, gross income is projected to be $1.61 billion, which will be 11.2 percent up year-on-year.

Operating margin, however, remained flat sequentially at 30.2 percent.

“We are seeing an increase in demand for news services, even in an environment where customers are focusing on projects which could enhance their competitiveness in the short term,” Infosys chief operating officer S.D. Shibulal said.

In spite of marginal currency volatility during the third quarter when the rupee weakened 21 paise (0.5 percent) to 44.71 from 44.50 against the dollar, the company’s chief financial executive V. Balakrishnan sounded a caution.

“Uncertainties related to sustainability of the global economic recovery could create greater currency volatility in the near future,” Balakrishnan said.

The company’s war chest, however, remained strong with cash and its equivalents, including investments in financial assets and deposits increasing to Rs.15,897 crore (Rs.159 billion/$3.6 billion) as against Rs.14,449 crore (Rs.145 billion/$3.1 billion).

“Our focus will continue to be on high-quality growth, balancing both the revenue growth and margins,” Balakrishnan added.

The company and its subsidiaries added 40 clients during the quarter, taking the total number of active clients to 612 at the end of December as against 568 a year ago and 592 a quarter ago.