Friday, July 10, 2009

Infosys lowers revenue projections for this fiscal

The meltdown has finally caught up with IT bellwether Infosys Technologies, forcing it to marginally lower its quarterly and annual revenue guidance for the first time even as it managed to stay afloat in the first quarter this fiscal.

Infosys saw its revenues decline 2.9 percent to Rs.54.72 billion (Rs.5,472 crore) in the first quarter, from Rs.56.35 billion (Rs.5,635 crore) in the fourth quarter last fiscal.

Based on this, Infosys has projected a year-on-year (YoY) decline of 1.9-0.1 percent in the second quarter to Rs.53.18-54.13 billion (Rs.5,318-5,413 crore), as per the Indian accounting standard.

"We believe that in the short-term, the global economic environment will continue to be challenging. We are working closely with our clients to help them navigate the downturn," Infosys chief executive S. Gopalakrishnan said in a statement Friday here.

With currency volatility impacting operations, the software major has also forecast that its consolidated revenue for the entire fiscal would decline 1.3 percent YoY to Rs.214.16 billion (Rs.21,416 crore) or grow fractionally by 0.3 percent YoY to Rs.217.47 billion (Rs.21,747 crore).

Its earlier projection had pegged the annual revenue at Rs.220.66-229.28 billion, forecasting a 1.7-5.7 percent YoY growth..

"The global currency markets continue to be volatile. During the quarter, the rupee appreciated against the dollar from Rs.50.72 to Rs.47.91 on average," said Infosys chief financial officer V. Balakrishnan.

In dollar terms too, consolidated revenue is expected to be in the range of $1.11-1.13 billion) in the second quarter, projecting a decline of 8.7-7.1 percent YoY, as per the International Financial Reporting System (IFRS).

Similarly, for the whole fiscal, consolidated revenue is projected to decline 4.6-3.1 percent YoY to $4.45-4.52 billion, as per the IFRS.

"We continue to invest in the future to take advantage of the growth opportunities in the medium and long-term," Gopalakrishnan said.

On annualised basis, net profit for the first quarter grew by 17.3 percent to Rs.15.27 billion (Rs.1,527 crore) from Rs.13.02 billion (Rs.1,302 crore) a year ago, while revenue increased 12.7 percent to Rs.54.72 billion (Rs.5,472 crore) from Rs.48.54 billion (Rs.4,854 crore) in the same period year ago, as per the Indian accounting standard.

"We continue to focus on margins, while making the right investments to accelerate growth," Balakrishnan said.

In dollar terms, net income grew marginally by 1.6 percent to $313 million from $308 million year ago, while revenue declined 2.9 percent to $1.12 billion from $1.15 billion in the same quarter year ago, as per the IFRS.

Unfazed by the downturn, Infosys chief operating officer S.D. Shibulal said the company was winning large deals and had benefited from vendor consolidation with certain clients.

But due to lower technology spending in light of downturn worldwide, client acquistion also declined to 27 as against 37 in the previous quarter and 49 in the year-ago period.

As a result, the company has 569 active clients at the end of first quarter as against 579 in the last quarter and 567 year ago.

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