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Infosys: Rupee depreciation saves the day
Jan 12, 2012

IT services major Infosys has announced its third quarter results for the financial year 2011-2012 (3QFY12). The company has reported a 14.8% QoQ growth in its sales and a 24.4% QoQ increase in its net profits. Here is our analysis of the results.

Performance summary
  • Sales grew by 14.8% QoQ during 3QFY12. This came on the back of 3.1% QoQ growth in volumes. Hence, the growth was mainly driven by depreciation in rupee. For the nine months ended December 2011 (9MFY12), sales grew by 22.9% YoY.
  • Operating margins improved by 3.0% QoQ to 31.2% during the quarter as compared to 28.2% recorded in the previous quarter (2QFY12). However for 9MFY12, margins declined by almost 1.0% YoY as compared to the same period last year.
  • Higher operating margins as well as higher other income led to a 24.4% QoQ growth in net profits during the quarter. For 9MFY12, net income increased by 19.9% YoY.
  • The company added 49 new clients during the quarter taking the total number of active clients to 665.
  • Considering slower growth in developed markets coupled with worries surrounding the Euro zone, the management has revised its full year guidance for FY12 downwards. The management now expects dollar revenues to grow by 16.4% YoY as against earlier guidance of 17.1-19.1% YoY. However, in rupee terms, there was an uptick in the guidance thanks to the rupee depreciation. In rupee terms, the management expects revenues to grow by anywhere between 24.6% to 24.7% YoY as against earlier guidance of 21.8% to 24% YoY and Earnings per Share (EPS) to grow by 23.2% YoY as against earlier guidance of 19.7% to 21.6% YoY.

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