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Infosys sees challenges, strong growth momentum

Tue Apr 15, 2008 5:34pm IST
 
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By Sumeet Chatterjee

BANGALORE (Reuters) - Infosys Technologies Ltd, India's No. 2 software services exporter, reported a near-10 percent rise in profit and gave a confident medium-term outlook despite a slowing U.S economy hitting outsourcing deals.

The Nasdaq-listed firm just missed market forecasts for its March quarter profit on Tuesday and sounded cautious on its short-term outlook, but its shares jumped as much as 7.2 percent on the outlook and an increased dividend pay-out ratio.

"The forecast is absolutely in line with expectation. At least the uncertainty associated with IT seems to be disappearing," said Arun Kejriwal, strategist at research firm KRIS. "The projections are robust, considering the fact Infosys generally come out with conservative estimates."

India's estimated $64 billion software services sector has been hit by slower growth from battered banks and financial firms, sectors that contribute most to the industry's revenue.

Infosys, the first in the sector to report results, remained confident, despite market expectations its growth will slow on growing evidence of a recession in the United States.

The firm, which counts Goldman Sachs, ABN AMRO and Philips Electronics among its 500-strong clients, forecast revenue for the year to end-March 2009 would grow 19-21 percent to $4.97-$5.05 billion, after rising 35 percent last year.

"While there could be short-term challenges due to global economic uncertainties, we see significant growth opportunities in the medium to long term," Chief Executive S. Gopalakrishnan said.

Shares in Infosys closed 6.2 percent higher at 1,510.80 rupees, helping lift the broader market, which rose 2.2 percent. The stock was boosted by an increase in the dividend pay-out ratio to up to 30 percent of net profit from 2008/09 from 20 percent, analysts said.  Continued...

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