IT bellwether Infosys Technologies on Friday posted better-than expected results for the second quarter, with the net profit increasing by 7.5 per cent Rs. 1,540 crore from Rs. 1,432 crore in the same quarter in the previous year. Earnings in the quarter improved by 3.1 per cent to Rs. 5,585 crore from Rs. 5,418 crore. Earnings per share during the quarter was Rs. 26.86, an increase of 7.4 per cent on a year-on-year basis.

The board of directors of the company declared an interim dividend of Rs. 10 a share of the face value of Rs. 5.

Announcing the results here, company Chief Executive Officer and Managing Director S. Gopalakrishnan said the company remained “cautiously optimistic.” Although the “demand environment stabilised” in the quarter, worries over “currency volatility” remained a key business “imponderable” for the company.

Currency volatility

The continuing volatility in exchange rates had an impact on the company’s earnings. Revenues, in dollar terms, declined by 5 per cent during the quarter, when compared to the same quarter of 2008-09.

The company’s revenue guidance for the remaining part of the year appears muted. It expects revenues in the third quarter to be in the Rs. 5,429-Rs. 5,476 crore range, which, on a year-on-year basis, implies a decline of between 6.2 and 5.4 per cent. In dollar terms, the company expects the decline to range between 1.4 per cent and 0.5 per cent in the current quarter. Revenues in rupee terms in the full financial year are expected to decline by between 1.2 and 1.7 per cent on an annualised basis. The company expects a more modest decline in dollar terms — by between 1.3 and 1 per cent. These projections are more favourable when compared to the estimates made by the company earlier this year.

Thirty five new clients were added by the company and its subsidiaries during the quarter.

Chief Operating Officer S. D. Shibulal said the company’s survey of its overseas clients indicated that the “demand recovery is likely to be protracted.” “Client spending is unlikely to take off this year and even the next year’s IT budgets are likely to be flat,” he remarked.

The company’s utilisation rate of human resources in the last quarter was about 71 per cent.

“Our comfort level is a utilisation rate of about 80 per cent,” he observed.

During the quarter, the company and its subsidiaries added 6,069 employees (gross). The net addition was 1,548 employees.

Brazil centre

During the quarter Infosys opened its first development centre in Brazil. It now employs more than 1,000 employees at its centre in China.

Mr. Gopalakrsihnan said the performance in the quarter showed the “resilience’ of the company’s business model.

“We intend sharpening our focus on IT-based solutions through new engagement models and through geographical expansion,” he said.

Chief Financial Officer Balakrishnan said the company would continue to maintain the $690-million hedging position it held in the second quarter. “It is difficult to take a long term view in a volatile environment,” he remarked.

Company sources said volume growth in the North American market was basically in the banking, finance and insurance space, retail, utilities and the healthcare segments. They admitted that there was little growth in the European market in the last quarter.

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