IT major Infosys said today that its YoY profits for the third quarter (Q3) had risen by 33%. The profits are 24.5% over those of the last quarter. The IT bellwether profited from a weakening rupee, but lowered dollar guidance for the next fiscal. The profits were ahead of the expectations of the market, which was expecting an increase of 30%.
The company said that operating profits have risen by 3% this quarter, and it had also added 49 new clients to its portfolio, 6 of them from the Fortune 500 list. Despite the robust performance, the company said that a troubling economic outlook in developed countries, the rupeeâ€™s slide against the dollar, and uncertainty in the market would dampen business in 2012.
â€œThe environment is very uncertain. There is no definitive answer to the Euro zone crisis at this point. Client confidence is down. Budgets are getting closed, the early indication is that we will be flat with marginal down,â€ CEO and MD, S D Shibulal said.
Infosys saw its share fall on the lowered guidance for FY12. Investors reacted negatively to the lowered guidance. Goldman Sachs said that the lowered guidance was a â€œnegative surpriseâ€ while Morgan Stanley maintained a neutral rating on Infosys stock, even as it said that it preferred TCS and Wipro.
The lower revenue guidance was well below what the market had been expecting leading to the lashback. The company, however, revised its revenue guidance for this fiscal 1.5 percent upwards to Rs.34,284 crore (Rs.343 billion) from Rs.33,795 crore (Rs.338 billion) on robust growth in the third quarter on a depreciating rupee under the Indian accounting standard.
Earnings per share (EPS) is expected to be Rs.147 for the fiscal, an increase of 23 percent YoY and Rs.32 for fourth quarter (Q4).
A weak rupee also helped the company beat revenue guidance of Rs.8,919 crore in the third quarter to post Rs.9,298 crore, registering 31 percent YoY growth and 15 percent sequentially from the previous quarter (Q2) under the Indian accounting standard.
Under the IFRS, net income grew 15 percent YoY to $458 million and gross income to $1.81 billion, up 14 percent YoY in the same quarter (Q3).
Earnings per share (EPS) also grew 33 percent YoY and 24 percent quarter-on-quarter (QoQ) to Rs.41.51 during third quarter.
For the fourth quarter (January-March) of this fiscal, consolidated revenue is projected to be Rs.9,402 crore, an increase of 30 percent YoY as per the Indian accounting standard.
Under the IFRS, gross income in Q4 is expected to be $1.8 billion, an increase of 13 percent YoY.
“The global economy, driven by slower growth in developed markets and coupled with the European crisis, could impact the growth of the IT industry,” Infosys chief executive S.D. Shibulal said in the statement.
A downward dollar guidance and Shibulal’s comments on the fallout of the sovereign debt crisis in Europe and flat IT budgets in 2012 tanked the blue chip company’s scrip of Rs.5 per share by 6.44 percent to Rs.2,644 from Rs.2,744 on opening of the trading session on the Bombay Stock Exchange (BSE). The scrip closed on Rs.2,826 at the end of Wednesday’s trading.
On the National Stock Exchange (NSE) too, the company’s share took a beating to plunge 6.53 percent to Rs.2,642 from an opening of Rs.2,750 per share.
“Notwithstanding short-term challenges, we are focused on long-term growth opportunities by investing in platforms and solutions, which will accelerate innovation, enhance returns for our clients and deliver higher business value,” Shibulal asserted.