Weak rupee strengthens Infosys' revenue guidance

Bangalore, July 12 (IANS) Indian global software major Infosys Friday projected a higher revenue (13-17 percent) for this fiscal (2013-14) on a weakening rupee in a volatile currency market, though the outlook remains same (6-10 percent) in dollars.

"Our consolidated revenue is expected to grow 13-17 percent year-on-year (YoY) in rupee terms this fiscal (FY 2014) and 6-10 percent YoY in dollar terms, as the rupee depreciated about 10 percent during first quarter (April-June)," Infosys chief executive Rajiv Bansal told IANS here.

For last fiscal (2012-13), the company posted 7.4 billion revenue in dollar terms, registering an increase of 5.8 percent YoY, and 40,352 crore in rupee terms, up 19.6 percent YoY.

The rupee weakened to $59.39 from $54.30 during the quarter (Q1) under review for the IT bellwether.

The upward revenue guidance in rupee propelled the company's blue chip scrip (Rs.5 per share) by 11.20 percent to trade at Rs.2,809.75 in the afternoon session on the bourses from an opening price of Rs.2,779.40 and Thursday's closing price of Rs.2,526.75, gaining a whopping 283 points and reversing its declining trend in the past few quarters.

"Despite facing an uncertain macro environment, changing regulatory regime and volatile currency environment, we have done well in Q1 (first quarter) and are cautiously optimistic about the rest of the year," Infosys chief executive S.D. Shibulal said in a statement after the company announced its financial results earlier in the day.

The IT bellwether has, however, discontinued the practice of giving revenue outlook for the three-month quarterly period since a year.

The company posted Rs.2,374 crore net profit for the quarter under review, registering 3.7 percent increase YoY from Rs.2,289 crore but fractionally (0.8 percent) lower sequentially from Rs.2,394 crore.

Consolidated revenue, however, increased 17.2 percent YoY to Rs.11,267 crore from Rs.9,616 crore year ago and 7.8 percent sequentially from Rs.10,454 crore.

Under the International Financial Reporting Standard (IFRS), net income at $418 million was fractionally (0.5 percent) up from $416 million year ago but 5.9 percent lower sequentially from $444 million.

Similarly, revenue grew 13.6 percent YoY to $1.99 billion from $1.75 billion and 2.7 percent sequentially from $1.94 billion.

"We maintained our margins (23.5 percent) and continued making investments in the business. Compensation increases for this fiscal (FY 2014) effective July will, however, affect our margins in the future quarters," Bansal said.

The company and its subsidiaries added 66 clients during the quarter, taking the total number of active clients to 836 from 798 quarter ago and year ago.

"We had a volume growth of 4.1 percent, while pricing remained stable in constant currency but came down marginally (0.7 percent) in volatile currency," Shibulal said.

Admitting that discretionary spending remained very challenging, the chief executive said the company was, however, optimistic on growth coming back as evident from seven large outsourcing deals it had signed during first quarter in $50-100 million range.

"We are also winning large multi-year contracts and seeing discretionary spending going up in verticals like financial services for regulatory compliance, retail for more efficiency and manufacturing for more productivity. In consulting services, we are seeing it (spending) happening through Loadstone acquisition," Shibulal asserted.

Noting that growth would return soon, as large IT outsourcing deals were due for rebids, Bansal said pricing would, however, remain stable during this fiscal.

"Pricing will be stable this year and will also depend on the business mix. Sentiment is improving following reports that the US economy is looking up. Currency volatility is a concern as rupee depreciated sharply in the first quarter," Bansal pointed out.

Though the company hired 10,138 employees during the quarter, the net addition was only 575, as a whopping 9,563 techies left since April, taking its attrition level to 16.9 percent on annualised basis, which is the highest in the recent past.

The total number of employees went up marginally to 157,263 from 156,688 quarter ago and year ago.

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