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Infosys ups revenue forecast on greater demand for services

Bangalore, July 13 (Calcutta Tube) Buoyed by higher than projected growth in the first quarter, Infosys Technologies Ltd revised its revenue forecast for this fiscal upwards on greater demand for its software services from its marquee clients.

‘While the global economic environment remains uncertain, we continue to see greater demand for services from our clients,’ Infosys chief executive S. Gopalakrishnan said Tuesday.

Accordingly, the IT bellwether expects its consolidated income for fiscal 2011 to be Rs.26,663 crore (Rs.267 billion), an increase of 17 percent year-on-year (YoY) as against Rs.25,017 or 10 percent YoY projected in April under the Indian accounting standard.

Under the International Financial Regulatory System (IFRS), gross revenue for this fiscal is expected to be $5.8 billion, an increase of 20 percent YoY, which is marginally higher than $5.6 billion or 17 percent YoY growth projected in April.

In line with the annual guidance, the company projected its income for the second quarter (July-September) of this fiscal to be Rs.6,595 crore, a growth of 18 percent YoY under the Indian accounting standard.

Under IFRS, second quarter (Q2) revenue is expected to be $1.4 billion, a YoY growth of 23 percent.

The forecast is based on the latest conversion rate of Rs.46.45 per dollar as against Rs.44.50 per dollar in April.

‘As we continue to invest in solutions and new engagement models, we are witnessing increased demand for our services from clients,’ chief operating officer S.D. Shibulal said.

Though revenue for the quarter under review (Q1), increased 13.3 percent YoY and 4.3 sequentially to Rs.6,198 crore its net profit declined 2.4 percent YoY to Rs.1,488 crore from Rs.1,525 crore year ago and seven percent sequentially or quarter-on-quarter (QoQ) from Rs.1,600 crore.

Under IFRS, net income grew 4.2 percent YoY to $326 million from $313 million but declined 6.6 percent sequentially from $349 million quarter ago.

Consolidated revenue under IFRS, however, grew 21 percent YoY to $1.4 billion from $1.1 billion year ago and 4.4 percent sequentially from $1.3 billion.

‘The volatile currency environment is a concern for the industry,’ company’s chief financial officer V. Balakrishnan said in the statement.

The global software major added 38 new clients during the quarter under review (Q1) as against 47 in the previous quarter and 27 year ago.

As a result, active clients are at 590 as against 575 a quarter ago and 569 a year ago. Repeat business has increased to 99.4 percent from 95.4 percent quarter ago and from 98.7 percent year ago.

‘Our volumes grew 7.6 percent YoY during the quarter though revenue from Europe declined to 20 percent from 25 percent year ago and 23 percent sequentially,’ Shibulal admitted.

Noting a number of new clients have solicited its help to make their businesses more dynamic and profitable, Gopalakrishnan said leading global firms continued to engage the company to manage their operations and ensure larger returns to scale for them.

‘The challenge for the industry is to enhance the investment to grow the business, given the uncertainty in the environment,’ Gopalakrishnan added.

The company’s earnings per share (EPS) declined 2.6 percent YoY to Rs.26.06 from Rs.26.76.

‘Our flexible financial and operating model enables us to prioritise our investments and focus on high quality growth even in this tough environment,’ Balakrishnan said.

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