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From the News Desk
Wednesday, 11. July 2007
Appreciating Rupee Hurts Infosys’ Profit
A appreciating rupee, higher salaries and visa fees have for the first time impacted the annual revenue guidance for the fiscal year 2007-08 of Infosys Technologies Ltd, India's second largest IT company, despite a rise in net profit in the first quarter.
In a departure from its tradition of revising the yearly guidance the company today lowered the revenue guidance for this fiscal under the Indian GAAP to Rs 162-164 billion from Rs 170-173 billion projected in April.
On annualised basis, the year-on-year (YoY) growth has been revised downwards by six percent to 16-18 per cent from 22-24 per cent.
The net profit for the first quarter (Q1) grew by 35 per cent YoY to Rs 10.79 billion from Rs 8 billion a year ago under the Indian GAAP. The earnings per share (EPS) is within the guidance range at Rs 18, posting YoY growth of 32 per cent.
The net profit, however, includes a reversal of tax provisions of Rs 510 million.
Under the US GAAP, the net income for the first quarter shot up to USD263 million from USD174 million in the same quarter of the last fiscal, registering a whopping 51 per cent YoY growth.
Similarly, consolidated revenue for Q1 is USD 928 million as against USD 660 million a year ago, an increase of 41 per cent YoY.
"The sharp appreciation of the rupee against all major currencies impacted our operating margins during the quarter," Infosys chief financial officer (CFO) V Balakrishnan said in a statement here.
At the same time he said a robust and flexible operating and financial model enabled the company to maintain its net margins while absorbing the impact of appreciating currency, higher wages and visa costs.
"Our liquidity has been strengthened with cash and cash equivalent reaching USD1.6 billion (Rs 64.42 billion) by the end of the first quarter (April-June)", Balakrishnan added.
Operating cash flows during Q1 were Rs 9.02 billion as against Rs 4.64 billion in the same quarter of the last fiscal.
The rupee has appreciated by the end of June to Rs.40.58 for one US dollar from Rs 43.10 in March-end, an increase of Rs 2.52 or 6.2 per cent in just three months.
Under the US GAAP, the revenue guidance has been revised marginally upwards to USD4-4.05 billion from USD3.95-4.02 billion given earlier, projecting YoY growth of 29-31 per cent as against 28-30 per cent earlier.
"As clients recognise the strategic imperative of global sourcing in an increasingly flat business world, the demand for large end-to-end players like Infosys continues to be strong. We continue to focus on being a partner of choice to our customers," new CEO and managing director S Gopalakrishnan said.
In a departure from its tradition of revising the yearly guidance the company today lowered the revenue guidance for this fiscal under the Indian GAAP to Rs 162-164 billion from Rs 170-173 billion projected in April.
On annualised basis, the year-on-year (YoY) growth has been revised downwards by six percent to 16-18 per cent from 22-24 per cent.
The net profit for the first quarter (Q1) grew by 35 per cent YoY to Rs 10.79 billion from Rs 8 billion a year ago under the Indian GAAP. The earnings per share (EPS) is within the guidance range at Rs 18, posting YoY growth of 32 per cent.
The net profit, however, includes a reversal of tax provisions of Rs 510 million.
Under the US GAAP, the net income for the first quarter shot up to USD263 million from USD174 million in the same quarter of the last fiscal, registering a whopping 51 per cent YoY growth.
Similarly, consolidated revenue for Q1 is USD 928 million as against USD 660 million a year ago, an increase of 41 per cent YoY.
"The sharp appreciation of the rupee against all major currencies impacted our operating margins during the quarter," Infosys chief financial officer (CFO) V Balakrishnan said in a statement here.
At the same time he said a robust and flexible operating and financial model enabled the company to maintain its net margins while absorbing the impact of appreciating currency, higher wages and visa costs.
"Our liquidity has been strengthened with cash and cash equivalent reaching USD1.6 billion (Rs 64.42 billion) by the end of the first quarter (April-June)", Balakrishnan added.
Operating cash flows during Q1 were Rs 9.02 billion as against Rs 4.64 billion in the same quarter of the last fiscal.
The rupee has appreciated by the end of June to Rs.40.58 for one US dollar from Rs 43.10 in March-end, an increase of Rs 2.52 or 6.2 per cent in just three months.
Under the US GAAP, the revenue guidance has been revised marginally upwards to USD4-4.05 billion from USD3.95-4.02 billion given earlier, projecting YoY growth of 29-31 per cent as against 28-30 per cent earlier.
"As clients recognise the strategic imperative of global sourcing in an increasingly flat business world, the demand for large end-to-end players like Infosys continues to be strong. We continue to focus on being a partner of choice to our customers," new CEO and managing director S Gopalakrishnan said.
