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Infosys down on brokerage downgrade talk

Shares of Infosys Technologies fell over 4 per cent on Wednesday, a day after it reported a 125 per cent growth in net profit, on talk that a leading foreign brokerage had cut its recommendation on the firm to hold from buy.

At its lowest on Wednesday, the share was down 4.7 per cent at Rs 5,645.50, before retracing to Rs 5,681 in afternoon deals.

The stock, which has a weightage of around 13 per cent on the Sensex, dragged the benchmark index down to the day's low of 4,061.83.

"It seems the brokerage is unhappy with the slow drop in dot-com exposure and there is also concern that growth in net profit on adjusted sequential basis is only 11 per cent," said the head of a foreign fund, with assets of Rs 12 billion under management.

The fund manager said he was quoting from the report, which was not made available.

"There are also concerns in the brokerage report that the company's net utilisation has fallen to 77.6 per cent from the second quarter's 80.5 and 85.6 in the first quarter," he said.

Infosys Technologies on Tuesday reported a 125 per cent year-on-year rise in net profit to Rs 1.66 billion for the three months to December 2000. Total income rose 136 per cent to Rs 5.52 billion in the same period.

The company said it could face pressure on revenue growth following its decision to reduce exposure to fully Internet-based clients (dot-coms). Revenue from these companies fell to 5.8 per cent of total revenue during the third quarter compared with the 9.5 per cent in the second quarter.

"The report also expressed concern that the new client addition slowed to 26 from the previous quarter's 27 and was well off the peak addition of 35 in the last quarter of 1999-2000 (April-March)," the fund manager said.

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