Under Indian GAAP, Infosys cut its forecast for earnings per share before exceptional items to between INR 78.20 and INR 79.00, from guidance given in April in the range of INR 80.29 and INR 81.58. The new forecast assumes an exchange rate of INR 40.58 per dollar, whereas the old guidance was based on a rate of INR 43.10.
The fall in Infosys’ shares had a knock-on effect on its Indian rivals, with market leader Tata Consultancy Services suffering a 3% drop in value and Wipro shares sliding by over 1%.
The strength of the rupee has also had an adverse affect on Infosys’ profit margins in the first quarter of its current fiscal year. For the three months to the end of June, the company recorded an operating margin of 24.7%, compared to 25.8% in the same period the previous year.
BG Srinivas, senior vice president and head of the EMEA region for Infosys, told Computer Business Review that the performance of the rupee had been stronger than expected, but insisted that Infosys had taken adequate forward cover, including reducing internal costs and increasing utilization. We will also continue to stay focused on increasing our presence in Europe, particularly as rupee appreciation against the euro and against the pound has been less severe than against the dollar, Srinivas said.
Under US GAAP, Infosys grew net profit in the first quarter of fiscal 2008 by 51% to $263m, including a reversal of tax provisions amounting to about $13m, on revenue that rose by 41% to $928m. The company added 35 new clients during the three-month period, taking its total number of active clients to 509.
Infosys also recorded a net addition of 3,730 employees in the quarter, taking its total headcount to just under 76,000. Attrition remained flat on the previous quarter at 13.7%.
