What to expect from IT Service Leader - Infosys

The first off the pack was iGate which said that their operating profit increased four fold due to better operating margins management and because they could achieve a rate above their goal of 15 %.

iGATE reported a net profit of Rs 22.6 crore on revenue of Rs 210.1 crore for quarter-ended March 2007 compared with a net of Rs 4.7 crore on revenue of Rs 210.8 crore in the preceding December quarter.

As far as company specific outlook is concerned, Phaneesh Murthy said "We are concerned about the mortgage meltdown as our revenues from loan fulfilment process have been adversely impacted. We expect the sluggishness to continue in the first quarter". But at the same time he agreed that CIO's world over are increasingly looking at offshore considering the fact that it saves money for the CEO's. So, the demand is going to be robust but specific instances like Mortgage meltdown would impact profitability to some extent.

Now, going to Mastek, it was an erractic performance as usual for the company. Mastek could increase the component of US Billing this quarter and Mastek could increase the revenue due to new customer billing in UK and Asia.

Total income for the quarter rose to Rs 214.79 crore from Rs 179.47 crore for the quarter ended March 31, 2006, the company said in a communiqué to the BSE. The company, on a stand-alone basis, has posted a net profit of Rs 57.33 crore for the third quarter as against Rs 12.29 crore for the previous corresponding quarter. Total income increased to Rs 134.73 crore from Rs 102.26 crore.

There was a one time profit on sale of a JV with Deloitte Consulting. But otherwise, the result was nothing to boost about.

Now, what to expect from Infosys -

Two factors which weight heavily on the guidance to be given by Infosys are Rupee Appreciation and Taxation.

Other important factor which has been clarified by many top rung IT Service providers and also from Cognizant's guidance for Calendar Year 2007 (Congnizant reports from Jan to Dec every year), there is a feeling that Infosys would be able to increase the volume and compromise a bit on margin front.

This means that the revenue guidance would be robust but the profit guidance would be affected by the above factors and the demand supply glut of the IT Employees in India which would necessitate Infosys to provide a better hike this year.

Overall, I feel the guidance should look better than what everone is expecting. Infosys giving a revenue growth guidance of more than 35 % and profit growth of more than 30 % would be viewed as a good sign for the overall IT Sector.