Infosys Technologies Limited
) reported third quarter 2012 earnings per ADS from continuing
operations of 80 cents, which was in line with the Zacks Consensus
Estimate. Earnings grew 3.4% sequentially and grew 13.9% year over
year, led by growth in all areas and across the customer base.
Total revenue for the quarter was $1.8 billion, representing a
year-over-year growth of 13.9%. The company saw growth in retail
and manufacturing and also in banking, insurance and financial
services. Quarterly revenues were also in line with the Zacks
The company had a good quarter in terms of client additions.
Infosys added 49 new clients during the quarter out of which 6 were
from the Fortune 500. Year to date, the company has 120 net client
The company recorded an operating profit of $560 million
compared with $479 million in the prior-year period. Net income
after tax was $458 million, up 15.4% year over year. For the
reported quarter, operating margin increased 3% year over year to
31% from 28% while net margin also grew from 23.5% to 25.4% year
Infosys maintains a strong liquidity position with cash &
cash equivalents, including investments in available-for-sale
financial assets and certificates of deposits, amounting to $3.7
billion at the end of the quarter.
For the quarter ending March 31, 2012, Infosys expects revenues
to be in the range of $1.80 billion to $1.81 billion, up 12.7% to
13.0% year over year. Earnings per ADS are expected to be 81 cents,
up 15.7% from the year-ago quarter.
For the fiscal year ending March 31, 2012, the company lowered
its revenue guidance. Revenues are now expected to be in the range
of $7.02 billion to $7.03 billion compared to $7.25 billion guided
earlier. Earnings per ADS are expected to be $3.00 compared to a
range of $2.88 to $2.92 guided earlier.
Although the demand in the financial services vertical appears
stable, the primary factor impacting revenue guidance was budget
delays. However, the company has not witnessed any cancellations or
push outs of projects to date.
The company's conservative approach to commodity work
(low-margin work) has had an impact on the guidance, but this is
not necessarily a negative, since there should be a positive effect
on profitability. In addition, the offshore business is expected to
continue to gain momentum.
Further, the company's recent acquisition of Australia-based
Portland Group is expected to expand the company's presence in the
Australian market and is expected to be neutral to earnings.
Infosys currently holds a Zacks Rank of #3, which implies a
short term Hold rating on the stock.
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