INFOSYS LTD - RESULTS FOR - Q4 FY 13 - FY 2012-13 - DISAPPOINTING OUTLOOK

INFOSYS LTD

Infosys Ltd has announced the  Results for the Quarter and Year ended March 31, 2013

Financial Highlights

Consolidated results under International Financial Reporting Standards (IFRS) for the quarter and Year ended March 31, 2013

AMT IN CR	Q4FY13	Q4FY12	Groth%	FY13	FY12	Growth%
REVENUES	10454	8852	18.1	40352	33734	19.6
COST OF SALES	6802	5199	30.8	25280	19808	27.6
GROSS PROFIT	3652	3653	0	15072	13926	8.2
OPERTNG EXP	1190	1006	18.3	4643	4147	12
OPERATING PROFIT	2462	2647	-7	10429	9779	6.6
NET PROFIT	2394	2316	3.4	9421	8316	13.3
COMPRE.INCOME	2328	2286		9458	8477
EPS- BASIC	41.89	40.54	3.3	164.87	145.55	13.3

Ø  Revenues INFOSYSre Rs.10,454 crore for the quarter ended March 31, 2013;  QoQ growth was 0.3%; YoY growth was 18.1%

Ø  Net profit was Rs.2,394 crore for the quarter ended March 31, 2013;  QoQ growth was 1.1%; YoY growth was 3.4%

Ø  Earnings per share (EPS) was  Rs.41.89 for the Qtr ended March 31, 2013;  QoQ growth was 1.0%YoY growth was 3.3%

Ø  The Board of Directors recommended a final dividend of  Rs.27per share for fiscal 2013.

Ø  Liquid assets including cash and cash equivalents, current available-for-sale financial assets, investment in certificates of deposits and government bonds INFOSYSre Rs.23,958 crore versus  Rs.22,501 crore as on December 31, 2012.

Other highlights:

Ø  Infosys and its subsidiaries added 56 clients during the quarter

Ø  Gross addition of 8,990 employees (net addition of 1,059) for the quarter by Infosys and its subsidiaries

Ø  1,56,688 employees as on March 31, 2013for Infosys and its subsidiaries

Ø  The company has decided to set aside up to US$100 million to invest in products, platforms and solutions ideas in line with Infosys 3.0 strategy“

“Global economic uncertainties remain challenging for the IT industry ,” said S. D. Shibulal, CMD. INFOSYS  is progressing on its strategic direction of building a high-quality company which is relevant to its clients. INFOSYS is making all the investments necessary to differentiate itself in the market place while positioning Infosys as a partner of choice for its clients –said the CMD.

”“The global currency market continues to be volatile reflecting the uncertain economic environment.  Its hedging strategy helps us to minimize the volatility impact " said Rajiv Bansal, Chief Financial Officer.

INFOSYS have a healthy balance sheet with its cash and cash equivalents at US$ 4.4billion.”

Outlook*

The company’s outlook (consolidated) for the fiscal year ending March 31, 2014, under IFRS is as follows:

·Revenues are expected to grow 6% to 10%; * Conversion 1 US$ = `54.30

Business Highlights

Ø  INFOSYS continue to see good adoption in its products and platforms from its clients. This quarter INFOSYS had 12 wins (excluding Finacle™) across industries and geographies, taking the total number of clients for products and platforms to over 75.

Ø  In the last quarter INFOSYS expanded its global footprint with a new delivery center in Munich, Germany, an onshore operations center in the Metro Atlanta Area , U.S.and a new delivery center for its BPO subsidiary in San José, Costa Rica.

Ø  The District of Columbia awarded us to implement the District of Columbia Access System (DCAS). DCAS will be a state-of-the-art health and human services solution that provides the District’s Health Benefit Exchange, a new integrated eligibility system for Medicaid, private health insurance and other programs with new case management capabilities that span programs and agencies.   This system will be used to determine eligibility and to enroll individuals, families, and small businesses that purchase health care coverage through the Exchange’s online marketplace.

Ø  Its focus on Cloud and Big Data as new growth areas continues to yield results; INFOSYS currently have more than 200 engagements and 3,500 experts in its Cloud practice. Over the last quarter, INFOSYS won over 10 engagements across Cloud services, Big Data and security. Its vision of investing in new growth areas with differentiated solutions was strengthened by the launch of Infosys Big Data Edge  that radically simplifies the complex task of analyzing Big Data to discover relevant information.

Ø  Mobility is an important focus for enterprises to make their organizations more efficient and customer centric and INFOSYS is helping  its clients realize the full business potential of mobility. In the last quarter INFOSYS started 18 new engagements across various areas like business and technology consulting, customer outreach, mobile marketing, field services, enterprise efficiency.

Ø  During the fourth quarter, INFOSYS applied for 21 unique patent applications in India and the U.S . With this, INFOSYS have 532 patent applications undergoing various stages of patent prosecution in India, the U.S. and other jurisdictions, and have been granted 84 patents by the United States Patent and Trademark Office and three patents by the Luxembourg patent office

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COMMENTS 

Ø  While the QoQ and YoY results are almost normal, it is the OUTLOOK  for next year, which has shaken the market. Infosys shares fell drastically on declaration of results, especially, the muted guidance.

Ø  NASSCOM  had set a target of 12-14% growth for FY 2014. But, Infy has given a steeply lower guidance of 6 – 10 %  for itself. Why is the company more conservative than NASSCOM average growth Rate?

Ø  Even in 2012-13, INFOSYS  achieved a growth rate of 5.8% against a forecast of 6.5% growth. Pricing Pressures and slower deal closures seem to have hit INFOSYS. But, the acquiring of Deals QoQ basis has been reasonable in FY 13.Big deals were not many, however.

Ø  Overall,  its competitors seem to be more flexible in pricing and therefore in romping the deals quickly.

Ø  There was no QoQ Sales growth in Q4  on Q3 FY 13. This probably is due to pricing pressures, despite higher volumes. The pricing pressures naturally lead to lower Margins.

Ø  On the positive side – 

Ø  the acquisition of Lodestone, the Swiss consultancy firm,  can help INFOSYS in FY 14 also – in clinching more deals in crucial markets.

Ø  The huge cash reserves and the new-found willingness to go for acquisitions could help INFOSYS to meet NASSCOM TARGETS and investor expectations.

Ø  The  pessimistic 6-10% dollar-revenue Growth rate (Conversion 1 US$ =  Rs.54.30 ) is still likely to result in higher rupee growth rate – due to the current exchange rate fluctuations.

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