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Infosys: Routine performance in 3QFY01 - Views on News from Equitymaster
 
 
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  • Jan 9, 2001

    Infosys: Routine performance in 3QFY01

    Beating market performance has become a routine performance for the Indian software major. Infosys has reported a jump (QoQ) in topline by 20% and the bottomline has gone by up 8% in 3QFY01. On a YoY basis the net profit has gone up by 143% (excluding other adjustments) and revenues by 136%.

    The company has beaten the market expectation of a YoY growth of about 115% in revenues and 127% growth in net profit.
    (Rs m) 2QFY01 3QFY01 Change
    Sales 4,461 5,371 20.4%
    Other Income 196 145 -26.1%
    Expenditure 2,697 3,196 18.5%
    Operating Profit (EBDIT) 1,764 2,175 23.3%
    Operating Profit Margin (%) 39.5% 40.5%
    Interest - - -
    Depreciation 242 330 36.2%
    Profit before Tax 1,718 1,989 15.8%
    Tax 178 195 9.9%
    Provision and contingencies - 131
    Profit after Tax/(Loss) 1,540 1,663 8.0%
    Net profit margin (%) 34.5% 31.0%
    Diluted number of shares 66.1 66.1
    Diluted Earnings per share* 93.1 100.6
    *(annualised)
    P/E (x) 64.5 59.7

    Infosysí excellent performance has been masked by writing off Rs 131 m on account of strategic investment in EC Cubed Inc, a US based provider of B2B e-commerce solutions. The company has filed for liquidation. Had this figure been excluded then net profits QoQ would have been up by 16%.

    Growth (%) Actual Expectations
    Sales 20.0% 18.0%
    Operating profit 23.3% 16.4%
    Net profit* 16.0% 13.4%
    *Excluding extra ordinary items

    Infosysí operating margins have gone up 40.5% and net profit margin excluding extra ordinary item was 33.4% compared to 34.5% in 2QFY01. This was due to fall in other income by 26%. Other income of 2QFY01 included gains from forex Rs 96.8 m, which dropped to Rs 34.4 m in 3QFY01. The other component of interest and others, was Rs 110.3 m for 3QFY01 compared to Rs 98.9 m.

    The improvement in operating margins could be attributed to higher billing rates and operating efficiencies.

    2QFY01 3QFY01
    Employee costs 37.6% 37.2%
    Other expenses 14.8% 14.2%
    Traveling expenses 8.0% 8.2%

    At the current market price of Rs 6,007, Infosys is trading at a P/E multiple of 60 times its 3QFY01 annualised earnings. We had projected revenues of Rs 17,646 m for FY01. For nine-month the company has already clocked sales of Rs 13,387 m. Revenues for 4QFY00 were Rs 2,774 m and a conservative YoY 100% growth would mean sales of Rs 4,548 for the quarter ending March 2001. This indicates that the company would be able to record a growth of more than 100% in both revenues and profits for FY01.

     

     

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