Infosys Q3 net up at Rs 2372 cr, $ rev guidance weak

Infosys Ltd beat market forecasts with a 33 per cent rise in quarterly profit as a weak rupee boosted margins, but it cut its full-year revenue outlook because of the debt crisis in Europe, its second-biggest market.

India’s export-driven software services companies are bracing for a slower pace of outsourcing contracts due to the lingering debt crisis in Europe.

Bangalore-based Infosys, India’s second-largest software services exporter, forecast dollar revenue growth of 16.4 per cent for the fiscal year to March 31, down from 17.1 per cent to 19.1 per cent projected in October.

company disappointed with its dollar revenue guidance for FY12.

The company posted a net profit of Rs 2,372 crore in the third quarter, a growth of 24.5% as compared to Rs 1906 crore in the previous quarter.

Its revenues moved up 14.8% to Rs 9,298 crore from Rs 8,099 crore, quarter-on-quarter. market expected a net profit of Rs 2,322 crore and revenues of Rs 9,223 crore .

“The global economy, driven by slower growth in developed markets coupled with the European crisis, could impact the growth of the IT industry,” Infosys Chief Executive S. D. Shibulal said in a statement.

India’s $76 billion IT services industry competes with Accenture Plc and IBM for orders to maintain information technology infrastructure and build software applications.

More than half of Infosys’s revenue is generated from the United States.

Global spending on information technology will rise at the slowest pace in three years in 2012 as Europeans, worried about the region’s sovereign debt crisis, are cutting back on investments, research firm Gartner Incsaid last week.

Gartner predicted global IT spending would rise 3.7 per cent in 2012, down from its earlier estimate of 4.6 per cent. The forecast for Western Europe was slashed to a 0.7 per cent drop in spending from a previously expected rise of 3.4 per cent.

Infosys, which is also listed in New York, said consolidated net profit rose to 23.72 billion rupees ($457 million) in the third quarter ended Dec. 31 from 17.8 billion rupees a year earlier, helped by an 8 per cent fall in the rupee.

Revenue rose 30.8 per cent to 92.98 billion rupees, as the company, whose customers include BP Plc, Procter & Gamble Co and Volkswagen AG, added 49 clients.

A poll of 10 brokerages had forecast a profit of 23.1 billion rupees on revenue of 92.2 billion rupees.

The rupee was the worst performer among Asian currencies in 2011, losing nearly 16 per cent against the dollar.

The company, worth about $31 billion, fell nearly a fifth in 2011, far more than its bigger rival Tata Consultancy Services that dropped 0.4 per cent and compared with a fall of about 16 per cent in the sector index.

Analysts say that among others, large software exporters such as Tata Consultancy Services and Wipro would report a positive impact of the currency market trends, when they report their earnings for the September-December quarter.

Profitability of TCS and Wipro is expected to rebound by a healthy 25.1 per cent and 12.8 per cent, respectively, resulting in combined average profit after tax growth of 18.9 per cent.Although analysts remain cautious because of the weak demand for IT services globally, which is leading to even price cuts by several of these firms, the weakness of the rupee is prompting analysts to upgrade the earnings as well as target price for IT companies.

Infosys Ltd, the country’s No.2 software services exporter, bigger rival Tata Consultancy Services Ltd and third-ranked Wipro Ltd get about three-quarters of their revenue from the United States and Europe. Both TCS andHCL Technologies will announce their results on January 17 and Wipro on January 20.