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Infosys outperforms: Profits up 134% - Views on News from Equitymaster
 
 
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  • Oct 10, 2000

    Infosys outperforms: Profits up 134%

    Infosys beat market expectations by recording a remarkable growth of 134% in profits during 2QFY01. Analysts were expecting a profit growth in the range of 100-125%.

    (Rs m) 1QFY01 2QFY01 Change
    Sales 3,555 4,461 25.5%
    Other Income 151 196 29.5%
    Expenditure 2,179 2,697 23.8%
    Operating Profit (EBDIT) 1,376 1,764 28.2%
    Operating Profit Margin (%) 38.7% 39.5%  
    Interest - -  
    Depreciation 177 242 36.6%
    Profit before Tax 1,350 1,718 27.2%
    Other Adjustments 55 0  
    Tax 137 178 29.5%
    Profit after Tax/(Loss) 1,268 1,540 21.5%
    Net profit margin (%) 35.7% 34.5%  
    Diluted number of shares 66.1 66.1  
    Diluted Earnings per share* 76.7 93.1  
    *(annualised)      

    During the 2QFY01 revenues from e-commerce increased to 31.7 % of total sales from 28.7% in the previous quarter. The company's product business accounts for marginal 2.7% of total business. Increasing revenues for e-business has helped the company improve its operating margins to 39.5% (38.7% in 1QFY01). Also revenues from North America contributed 75% to total sales followed by 18% from Europe.

    Revenue by technology 1QFY01 2QFY01
    Distributed Systems 42.8% 41.8%
    Mainframe/Mid-range 12.9% 16.5%
    Internet 31.4% 28.7%
    Proprietary Telecom 5.9% 6.4%
    Others * 7.0% 6.6%
    Total 100.0% 100.0%

    * It includes revenues from CAD/CAM/CAE and embedded systems

    The company continues to expand its client base and has added 27 new clients during this quarter. The top 5 customers of the company contributes 24.9% of its total revenues and there are only 2 clients accounting for more than 5% of revenues. Thus Infosys has de-risked its revenue model through well diversified technology mix and limiting client concentration.

    At the current market price of Rs 7,316 Infosys is trading at a P/E of 86 times its first half annualised earnings. The company has always enjoyed premium valuations in the market led by its ability to maintain a high growth rate and its high management credibility. The results declared by Infosys may set the trend for valuations in the beaten-down software sector and could trigger buying sentiment.

     

     

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