INFOSYS - FIRST QUARTER RESULTS - Q1 FY 2013 - REVENUES UP 29%YoY; NET PROFITS UP 33%YoY - BUT FUTURE FORECAST LOW - SUFFERS BY COMPARISON WITH TCS

INFOSYS

RESULTS FOR Q1 FY 2013

INFOSYS has declared its results for Q1 FY 2013 (Q/e June, 2012) . The results show some progress over Q1 FY 12 (the corresponding quarter of last year)  in terms of Revenue and Profits both. But, compared to the preceding quarter of Q4 FY 12, the revenues are up but Profits are slightly LOWER.

In the IT Industry, comparison between Infosys and TCS is inevitable. By comparison, INFOSYS suffers, less on account of performance and more on account of FUTURE OUTLOOK projected by the Management. 

Let us look at the performance of INFOSYS (Consolidated) below (Figures in Crores):-
 

Particulars	Q1FY13	Q4FY12	%dif1	Q1FY12	%Dif2
Revenue	9616	8852	8.63	7485	28.47
cost of sales	5810	5199	11.75	4577	26.94
GPT	3806	3653	4.19	2908	30.88
OPT	2693	2647	1.74	1952	37.96
NPT	2289	2316	-1.17	1722	32.93
Equity(Rs.5each)	286	286	0	286	0
EPS(OnR.5 each)	40.06	40.54	-1.18	30.14	32.91
cash+Cash Eqlnts	3695	4121	-10.34	3795	-2.64

The Earnings per share of Infosys this Quarter is Rs.40 on a Rs.5 share, which works out to Rs.8 per Rs.1 share. In contrast, TCS has clocked  Rs.16.92 per Rs.1 share.

TCS Revenues are up 12.1% QoQ and 37.7% YoY. Its Net Profits are up 14.6% QoQ and 37.4% YoY. In contrast, though YoY, the revenues and profits of Infosys have improved well, QoQ,  the current quarter Net profit figures are lower QoQ.

First Quarter Net Profit increase of Infosys is very decent at 33% YoY (over Q1 FY 12). But, TCS exceeded this smartly  by a 37.4% YoY growth in quarterly profit.

Infosys has said that - it has completed its INTERNAL RE-STRUCTURING VERSON 3.0 – and is ready for all NEW CHALLENGES.  Does it mean that INFOSYS will be much more energetic in chasing deals in future? 

INFOSYS has not made any quarterly Forecast this time – which is good, anyway. Even the annual Guidance it has indicated seems unnecessary at this point of time – given the way, world economies are moving even now. There is possibility that some Major economies like US can come out of their recessionary problems quickly. Within Europe too – some countries may be able to pull their economies through, while some may struggle for some more time.

TCS says -it expects to beat the industry revenue growth forecast of 11-14 percent for this fiscal year set by Nasscom. But, Infosys feels it can grow around 5% this year. Given that just one quarter is over, and 3 full quarters are ahead – it seems unnecessary for INFY to predict the 9 months future – in Q1 itself – that, it will be as LOW as 5%?

INFOSYS has added 51 customers during the quarter – against 29 by TCS. This is not BAD AT ALL  for Infosys. In last quarter also, INFOSYS had added good number of clients.

INFOSYS has a head count of  151,151 against 2,43,545 of TCS. Utilization is much higher in TCS than in INFOSYS at this point of time.

"Customers understand that the macro is what it is and they have learnt to operate in that environment ... so the decisions are getting made, deals are getting signed," says TCS CEO&MD N. Chandrasekaran. What this seems to mean is – macro is a GIVEN. Decisions are being made according to it. And, deals are getting made. Is it not the same for INFOSYS? 

Infosys has a huge cash pile – which it can invest – but, it is waiting for the right opportunity. Well. It can either wait, or, it can chase. Some other smaller Indian IT Companies are indeed finding some opportunities for investing their Cash.

Is a Big Bench a big drag on an IT company? Yes. It is. That is – if can’t utilize the Bench profitably.

If you have PROJECTS, use them on PROJECTS. Else, use them on PRODUCTS.

INDIAN IT COMPANIES are sitting on RICH TALENT POOLS – and use them on the Projects of US, Euro and other  companies. Both INFY and TCS have of course  made some good beginning in making Good software products – specific for Industries – and now these products (like Banking products) are widely used in the world. Both the companies derive good annual revenue too from these products.

There must be many more products which the world needs – and which INFY / TCS can make. There is reasonable HOPE that INFY will outshine itself ,despite its gloomy forecast, in the coming quarters, given that customer addition is very bad, and world scenario may also improve in the months ahead.

So, how do we look at world IT scenario – INFY way or TCS way? Q2 should give a better pointer than Q1.

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