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Infosys stocks plummet despite Q4 profit
Friday, 11 April 2003, 19:30 IST
BANGALORE: India's largest listed software giant, Infosys Technologies, has reported a net profit increase of 23 percent in its January-March quarter, but its growth outlook of 27 percent for the next year appears to have sharply impacted the stock market.
The company's net profit for the quarter ended March 31, 2003, touched 
2.59 billion, up from 2.10 billion logged in the January-March quarter of fiscal 2001-02, "meeting guidance despite challenging environment."
But its outlook for 2003-04 was placed at a comparatively conservative revenue growth of 26-27 percent in dollar terms and earnings growth of 14 to 16 percent, taking into account the macro-economic factors along with the impact of the Iraq war and the Severe Acute Respiratory Syndrome (SARS).
The stocks of the country's showpiece in IT plummeted 25 percent soon after the results were announced.
"Outsourcing is gaining momentum. This is a positive trend, but on the other side you have macro-economic factors like the uncertainties relating to the U.S. economy. And nobody knows the impact of the Iraq war and the SARS on the industry," Nandan Nilekani, the company's CEO and MD, told a news conference.
"Our aim is to build volume and manage costs. We expect the revenue growth to come on the back of price pressure with 30 percent plus volume growth," Nilekani added in response to questions from reporters.
Asked if it was not a conservative forecast given the fact that the company had performed better than its projections in the last two years, Nilekani said: "Our forecast is based on macro factors as well as an assessment made with clients. But, we did revise it (forecast) last year once the situation changed."
"Two years back, we gave a guidance of 30 percent and we did 31 percent. On the revenue side, we exceeded guidance. In first quarter of 2002, our net margin was 30 percent, but in the fourth quarter it came down to 25 percent. I am certainly not happy with that," he said.
Nilekani agreed the 100 percent revenue growth of yesteryears was not to be seen in the last two-three years. ``That growth came from 60 percent volume growth and 40 percent price growth. Last year, revenue growth was 30 percent but earnings were 18 percent.''
In the last quarter, revenue growth, as compared to the quarter ending December 31, 2002, comprised a volume growth of 12.8 percent that was offset by a price decline of 5.1 percent.
Total income in the quarterly period registered a growth of 50 percent to touch 10.19 billion, up from 6.80 billion in the quarter ended March 31, 2002.
"Fiscal 2003 was a challenging year for the Indian software industry," Nilekani added.
Infosys, which is listed on Nasdaq, added 28 clients to its portfolio during the January-March quarterly period. Onsite revenue went up to 55.5 percent and offshore was down to 44.5 percent in the last two quarters as against the 2002 annual average of 50.8 percent onsite and 49.2 percent offshore.
"First, there were a lot of project starts so onsite went up. Also, package implementation went up to 14 percent," Shibu Lal, director, said.
"Pricing pressure continues. The decline in blended revenue productivity has been partly offset by improved utilization," he added.
The company added nearly 5,000 people in the last year, taking its employee strength to 15,356 by March 31,2003. "We will be adding another 800 to 1,000 more in the first quarter of 2004," Kris Gopalakrishnan, chief operating officer, said.
"From March 15, we have had no client visits because of SARS and the Iraq war," Nilekani said.
"Four of our employees have returned from Hong Kong," Gopalakrishnan added.
Source: IANS
2.59 billion, up from 2.10 billion logged in the January-March quarter of fiscal 2001-02, "meeting guidance despite challenging environment."
But its outlook for 2003-04 was placed at a comparatively conservative revenue growth of 26-27 percent in dollar terms and earnings growth of 14 to 16 percent, taking into account the macro-economic factors along with the impact of the Iraq war and the Severe Acute Respiratory Syndrome (SARS).
The stocks of the country's showpiece in IT plummeted 25 percent soon after the results were announced.
"Outsourcing is gaining momentum. This is a positive trend, but on the other side you have macro-economic factors like the uncertainties relating to the U.S. economy. And nobody knows the impact of the Iraq war and the SARS on the industry," Nandan Nilekani, the company's CEO and MD, told a news conference.
"Our aim is to build volume and manage costs. We expect the revenue growth to come on the back of price pressure with 30 percent plus volume growth," Nilekani added in response to questions from reporters.
Asked if it was not a conservative forecast given the fact that the company had performed better than its projections in the last two years, Nilekani said: "Our forecast is based on macro factors as well as an assessment made with clients. But, we did revise it (forecast) last year once the situation changed."
"Two years back, we gave a guidance of 30 percent and we did 31 percent. On the revenue side, we exceeded guidance. In first quarter of 2002, our net margin was 30 percent, but in the fourth quarter it came down to 25 percent. I am certainly not happy with that," he said.
Nilekani agreed the 100 percent revenue growth of yesteryears was not to be seen in the last two-three years. ``That growth came from 60 percent volume growth and 40 percent price growth. Last year, revenue growth was 30 percent but earnings were 18 percent.''
In the last quarter, revenue growth, as compared to the quarter ending December 31, 2002, comprised a volume growth of 12.8 percent that was offset by a price decline of 5.1 percent.
Total income in the quarterly period registered a growth of 50 percent to touch 10.19 billion, up from 6.80 billion in the quarter ended March 31, 2002.
"Fiscal 2003 was a challenging year for the Indian software industry," Nilekani added.
Infosys, which is listed on Nasdaq, added 28 clients to its portfolio during the January-March quarterly period. Onsite revenue went up to 55.5 percent and offshore was down to 44.5 percent in the last two quarters as against the 2002 annual average of 50.8 percent onsite and 49.2 percent offshore.
"First, there were a lot of project starts so onsite went up. Also, package implementation went up to 14 percent," Shibu Lal, director, said.
"Pricing pressure continues. The decline in blended revenue productivity has been partly offset by improved utilization," he added.
The company added nearly 5,000 people in the last year, taking its employee strength to 15,356 by March 31,2003. "We will be adding another 800 to 1,000 more in the first quarter of 2004," Kris Gopalakrishnan, chief operating officer, said.
"From March 15, we have had no client visits because of SARS and the Iraq war," Nilekani said.
"Four of our employees have returned from Hong Kong," Gopalakrishnan added.
Source: IANS