Rupee depreciation has benefited Infosys numbers (Moneycontrol)
Infosys came in with a stellar set of numbers earlier today. Its net profit stood at Rs 794 crore versus market estimates of Rs 713 crore. The company also upped its guidance for FY07 and the rupee depreciation has benefited the Infosys numbers. It expects a revenue of Rs 13,400 crore for the year, and an EPS of over Rs 124.
Nandan Nilekani, MD and CEO of Infosys says that there has been an improvement in the business performance and the outlook is looking better. He says that they almost had a 15% growth in the rupee and so they have been able to revise their dollar guidance from 28-30% to something like 34.5-35.9%.
Nilekani said, "On the rupee side, the depreciation of the rupee has also contributed, which is why we have revised our rupee guidance to 40%. So I think our overall business performance improvement, plus the rupee depreciation has contributed to this quite a bit of change in the guidance."
He added, "In dollar terms also, we had said 28-30% and now we are saying 34.5-34.9%, so there is a significant real increase in the business and that is reflected in the first quarter results where even in dollar terms we have grown over 11%."
Chief Financial Officer at Infosys, V Balakrishnan says that if one looks at this quarter, this is first time that both the customer markets and the currency markets were in their favour.
"Rupee depreciated by something around 3.6%, during the quarter it depreciated by something around 8-9% against the euro. So everything comes together this quarter."
Dipan Mehta, member of BSE and NSE believes that the Forex gains have benefited the Infosys numbers.
He said, "There is no denying the fact that the forex gains or the fact that the rupee has depreciated will benefit the entire IT pack. We do not know exactly at which point of time the forex covers have been taken, but on the whole it is a clear fact that for every change in the rupee, there are gains on the operating profit margins; whether it comes in other income or goes as a part of the operating income, is a matter of detail."
He adds that, "What is more important is the outlook for the rupee going forward. Remember clearly in 2005, it was the threat that if the rupee were to strengthen further then the operating profits margins and the entire business model for the Indian IT companies was under threat. But now looking forward, the forecast appears that the rupee at best, would remain stable and may even lose ground against other currencies. So the environment from the forex point of view is extremely healthy for IT companies."
Devina Mehra of First Global says that the Infosys results were along the lines that they had expected and of course, the rupee depreciation has also helped.
"I was looking at our last quarter's note and we had said that a quarter from now, the rupee could well be at 46.25 and that is where I think it opened this morning. So that obviously has helped, which has really shown up in the other income."
Infosys came in with a stellar set of numbers earlier today. Its net profit stood at Rs 794 crore versus market estimates of Rs 713 crore. The company also upped its guidance for FY07 and the rupee depreciation has benefited the Infosys numbers. It expects a revenue of Rs 13,400 crore for the year, and an EPS of over Rs 124.
Nandan Nilekani, MD and CEO of Infosys says that there has been an improvement in the business performance and the outlook is looking better. He says that they almost had a 15% growth in the rupee and so they have been able to revise their dollar guidance from 28-30% to something like 34.5-35.9%.
Nilekani said, "On the rupee side, the depreciation of the rupee has also contributed, which is why we have revised our rupee guidance to 40%. So I think our overall business performance improvement, plus the rupee depreciation has contributed to this quite a bit of change in the guidance."
He added, "In dollar terms also, we had said 28-30% and now we are saying 34.5-34.9%, so there is a significant real increase in the business and that is reflected in the first quarter results where even in dollar terms we have grown over 11%."
Chief Financial Officer at Infosys, V Balakrishnan says that if one looks at this quarter, this is first time that both the customer markets and the currency markets were in their favour.
"Rupee depreciated by something around 3.6%, during the quarter it depreciated by something around 8-9% against the euro. So everything comes together this quarter."
Dipan Mehta, member of BSE and NSE believes that the Forex gains have benefited the Infosys numbers.
He said, "There is no denying the fact that the forex gains or the fact that the rupee has depreciated will benefit the entire IT pack. We do not know exactly at which point of time the forex covers have been taken, but on the whole it is a clear fact that for every change in the rupee, there are gains on the operating profit margins; whether it comes in other income or goes as a part of the operating income, is a matter of detail."
He adds that, "What is more important is the outlook for the rupee going forward. Remember clearly in 2005, it was the threat that if the rupee were to strengthen further then the operating profits margins and the entire business model for the Indian IT companies was under threat. But now looking forward, the forecast appears that the rupee at best, would remain stable and may even lose ground against other currencies. So the environment from the forex point of view is extremely healthy for IT companies."
Devina Mehra of First Global says that the Infosys results were along the lines that they had expected and of course, the rupee depreciation has also helped.
"I was looking at our last quarter's note and we had said that a quarter from now, the rupee could well be at 46.25 and that is where I think it opened this morning. So that obviously has helped, which has really shown up in the other income."