Instant view: Infosys net drops 0.9 percent

MUMBAI (BestGrowthStock) – Infosys Technologies (INFY.BO: ), India’s No. 2 software services exporter, reported a 0.9 percent drop in quarterly profit, slightly worse than the market expectations as a firmer rupee countered the impact of rising demand for outsourcing.

The company, which counts Goldman Sachs (GS.N: ), BT Group (BT.L: ) and BP (BP.L: ) among its clients said January-March net profit fell to 16.00 billion rupees ($361 million) from 16.15 billion a year ago.

A Reuters poll had estimated a profit of 16.05 billion rupees.

COMMENTARY:

SANDIP SABHARWAL, CEO OF PORTFOLIO MANAGEMENT SERVICES AT PRABHUDAS LILLADHER, MUMBAI:

“The results show that although there is buoyancy on the business front, there is pressure on the margins. This pressure is not likely to go way as rupee is still appreciating.

“I would not buy Infosys at this point in time I am underweight on the IT sector.”

ARUN KEJRIWAL, STRATEGIST, KRIS, MUMBAI:

“The rupee appreciation against the dollar is hurting the company. Its performance is not being viewed in a similar light by the market and it is quoting at 20-plus price to earnings multiples. It should perform better to justify these valuations.”

SRIVATHSAN RAMACHANDRAN, ANALYST, SPARK CAPITAL ADVISORS, CHENNAI:

“Earnings outlook (for FY11) were more or less in line with our expectations. Infosys is known to be the best manager of margins in the industry. If we are going to see margin pressure it is going to be right across, it is not going to be Infosys specific.

“We are broadly positive on the Indian outsourcing sector. We feel the potential is more than what is being tapped and there are many services which will be growth engines, going ahead.”

A.N. SRIDHAR, FUND MANAGER, SAHARA MUTUAL FUND, MUMBAI:

“The revenues last quarter have been better than expected. But the earnings per share guidance for this quarter is quite conservative. I think going forward the currency movements, especially that of the rupee and dollar will play a significant role in the financial performance. And the management has rightly expressed concerns on it.”

MARKET REACTION:

Infosys shares were down 0.2 percent at 2,677.65 rupees in choppy trade at 9:17 a.m. (0347 GMT). It rose as much as 2.3 percent and fell as much as 1.8 percent.

The main stock index (.BSESN: ) was down 0.3 percent at 17,800.90.

Stock Market News

(Reporting by Janaki Krishnan, Ami Shah, Aniruddh Basu; Editing by Ranjit Gangadharan)

Instant view: Infosys net drops 0.9 percent