Infosys Q1 net profit up 15.4%; almost matches estimates

Infosys Ltd, India's second-largest software services exporter, reported a 15.4-per cent rise in fiscal first-quarter profit, as a surge in wages offset strong demand from western clients.

Bangalore-based Infosys, also listed on the Nasdaq, said consolidated net profit rose to Rs1,720 crore ($387 million) from Rs1,490 crore a year earlier. The results were marginally lower than most analysts had expected.

Infosys projected sales in the year up to March to range from $7.1 billion to $7.3 billion, missing the $7.5 billion average of 56 analyst estimates compiled by Bloomberg. The company raised its earnings per American depositary receipt.

Infosys had forecast in April that higher wages would erode profitability as the software exporter grappled with its highest annual rate of employee turnover in at least 13 years.

Operating profit margin in the first quarter was 26.1 per cent, chief financial officer V Balakrishnan said at a briefing in Mysore. Wage increases crimped margins by 300 basis points, he said. A basis point is 0.01 percentage point.

''The economic environment is still volatile,'' Balakrishnan said. ''All the markets have the same problems - high unemployment, low growth, high inflation, huge fiscal deficit. The sovereign risk in Europe is becoming bigger and bigger. Clients are still cautious.''

Chief executive officer S Gopalakrishnan will step down on 21 August, Infosys said in April. He will be succeeded by S D Shibulal, currently chief operating officer. Chairman Murthy will retire the same day and be replaced by Gopalakrishnan and former ICICI Bank Ltd. head K V Kamath, who will be co- chairmen.

Shibulal worked with Sun Microsystems between 1991 and 1996, during a five-year sabbatical, before returning to Infosys and establishing its internet consulting practice. He later went on to head worldwide sales at the company.