The Hindu Business Line : Infosys Q2 net rises 36 pc

A strong volume growth backed by an improved pricing scenario helped the second largest software exporter to cross the billion-dollar mark in the first half of the current fiscal.

Infosys beat street expectations on Tuesday, to post net profit of Rs 606 crore for the quarter-ended September 2005, up 36 per cent over the corresponding quarter last year. Revenues were at Rs 2,294 crore, up 31 per cent from the corresponding quarter last year. The Q2 profits included a tax write back of Rs 20 crore due to an assessment settled overseas.

On sequential basis, net profits and revenues were up 13.9 per cent and 10.7 per cent respectively. Net profits for first half stood at Rs 1,137 crore, an increase of 36.2 per cent over corresponding period last year, while revenues for H1 stood at Rs 4,366 crore, a growth of 33.6 per cent.

The company declared an interim dividend of Rs 6.5 per share (130 per cent on par value of Rs 5 each). Tracking Q2 results, the Infosys share closed higher on Tuesday on the BSE at 2,683.90 after touching an intra-day high of Rs 2,727.

The robust Q2 performance and a weak rupee prompted Infosys to raise its revenue guidance for the full year to Rs 9,361-9,383 crore, from Rs 8,947-9,051 crore previously. The company also issued an increased EPS forecast, projecting Rs 89 to Rs 89.40 for the current fiscal, up from its previous forecast of Rs 84.70 to Rs 86. For Q3, Infosys expects revenue in the range of Rs 2,443 crore to Rs 2,452 crore.

The Infosys CEO, Mr Nandan Nilekani, attributed the robust Q2 growth to the company's effective focus on a broad array of services. It signed 34 new clients, including the mega ABN Amro deal. It also added a record 8,026 employees on gross basis (6,390 on net basis) during the quarter, taking overall headcount to 46,196.

"Despite hiring record number of employees, we have maintained our margins," said the Infosys CFO, Mr T.V. Mohandas Pai. Infosys saw its margins improving during the quarter to 26.41 per cent, compared to 25.67 per cent the previous quarter. Mr Pai said he expects margins to remain stable the next two quarters due to a weak rupee and the stable pricing environment.

"We are already seeing a three per cent increase in billing rates from new clients," Mr Pai said, adding that the onsite rates were up by one per cent while the offshore rates were higher by 0.3 per cent. The company expects to add another 7,700 people during the next two quarters.

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