Infosys quarterly profit rises to exorcise Satyam spectre

Bangalore: India's Infosys Technologies beat market expectations with a one-third jump in quarterly profit, but trimmed its annual forecast as clients squeeze contracts and prices in a global downturn.

Shares in the country's second-largest information technology (IT) services firm rose as much as 7.2 per cent yesterday as the market took heart from the firm's higher business volumes in the quarter and a flight to safety in the wake of accounting fraud at rival Satyam Computer Services

"Infosys is attracting default buying. There is switching over from other large cap and mid cap IT stocks, as the company is considered good from a corporate governance and growth point of view," said Deepak Jasani, head of retail research at HDFC Securities.

Infosys, valued at $14.6 billion (Dh53.69 billion) on yesterday's closing price, said it was not seeing any fallout on its business from the scandal at fourth-ranked Satyam, which has cast a shadow on the entire sector.

"Customers clearly understand it's a one-off event. We are not actively pursuing either employees or customers of Satyam because we believe we should not accentuate their problem," Infosys chief financial officer V. Balakrishnan said.

Infosys added 30 new clients in the December quarter.

Shares in Infosys closed up 6.4 per cent at Rs 1,230.2 (Dh91.86) - their highest close in more than one month in a broader market down 0.4 per cent. Infosys, which develops applications and designs supply chains for clients such as Philips Electronics and Goldman Sachs, cut its earnings forecast for a second quarter running in the backdrop of a deepening global downturn.

Analysts have also said global firms, scared by the revelations of fraud at Satyam, might delay giving large contracts as they step up due diligence, adding to the pressure on India's $52 billion IT and back-office outsourcing sector.

Infosys forecast revenue for the year to March would grow 11.8-12.8 per cent in dollar terms, down from October's forecast of 13.1-15.2 per cent.

"The environment is challenging because the clients are going through turmoil. There is leadership change and ownership change in our clients," chief operating officer S.D. Shibulal told reporters in the southern city of Bangalore.

Infosys, also listed on the Nasdaq, said October-December net profit rose to Rs16.41 billion ($336 million) from Rs12.31 billion a year ago.