Infosys reports 57% annual profit gain

Infosys Technologies, India’s second-largest software exporter, reported a record result for the fiscal year that ended in March and moved to dispel concerns that a potential slowdown in the US economy might hurt Indian outsourcing companies this year.

Infosys reported full-year sales of Rs138.9bn, up 45.9 per cent on the previous year, and net profit of Rs38.5bn, up 56.6 per cent. The result was helped by a tax gain of Rs1.2bn and compared with an average net profit estimate of Rs10.3bn from a Reuters poll of 14 brokerages.

“The global IT industry continues to show strong growth,” said Nandan Nilekani, chief executive officer and managing director of Infosys.

As the first of the country’s big three computer services companies to report full-year results, Infosys’ report sheet is seen as an important indicator of the health of the sector.

Tata Consultancy Services, the largest Indian IT company, is due to report its results on Monday while Wipro, the number three number, is to report on April 20.

While Infosys management sounded bullish about the outlook for the current financial year, the company said it expected earnings per share to grow 20-22 per cent, compared with growth of 53.5 per cent last year.

However, Hitesh Zaveri, analyst at Edelweiss Securities in Mumbai, said he believed concerns about a possible US slowdown hitting Indian IT companies were being blown out of proportion.

“For the sector as a whole, large caps in particular, the demand scenario continues to be healthy,” Mr Zaveri said.

Infosys’ operating margin, fell to 27.5 per cent in the quarter that ended March 31 from 28.5 per cent in the previous quarter under the impact of the rupee’s appreciation against the dollar.

The company also announced management changes, with current chief executive Nandan Nilekani promoted to co-chairman alongside “chief mentor” Narayana Murthy.

This has fuelled speculation in the Indian media that Mr Murthy might be preparing for a potential political career, possibly to run for president.

Mr Nilekani will be succeeded as CEO by Kris Gopalakrishnan, the current chief operating officer.

Infosys’ shares were up 3.5 per cent at Rs2,114.95 on the Bombay Stock Exchange. The 30-stock BSE Sensex index was up 1.9 per cent at 13,369.43 points.