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Indian software companies are likely to register 15-20 per cent quarter-on-quarter net profit growth in the three months ended December 31, 1998.

This is a result of the boost given by higher volume of overseas business, analysts say. Providing solutions to the year 2000 problem will contribute a large part to increased revenues, they claim.

T O D A Y

• Cereal # Y2K • Sonata's Rs 1.28b aim • Novell training offer • Sweat equity trouble

"Software is basically the same story, only there is more urgency about the Y2K jobs," Ketan Doshi, an analyst with Sunidhi Consultancy, has been quoted as saying.

Doshi points out that the "The largest chunk of these projects will be finished in the third or fourth quarter."

He says higher volumes from Y2K projects would partly offset the rupee's slower depreciation than other regional currencies.

The rupee has been relatively steady around Rs 42.50 for the last four months and fell 7.7 per cent against the dollar over 1998.

"If it (growth) is slightly lower than the first or second quarter, it is because the rupee has not depreciated so much in the period," says R Ravi, analyst with Birla Marlin Partners.

However, he feels there is no need to be pessimistic about growth. "There is no dearth of volumes in the traditional jobs of development and maintenance," he assures.

Doshi forecasts profit will jump by an average of 70 per cent on a year-on-year basis. Analysts have not been doing third-quarter numbers because this is the first year after such a declaration has been made mandatory.

Software firms have turned in stellar performances in recent times. Infosys Technologies posted a net profit of Rs 520.7 million in the first six months of 1998-99 (April-March) compared to Rs 230.3 million in the previous year. Some analysts forecast Infosys net profit at Rs 1.1 billion for the full year against RS 603.7 million in 1997-98.

Satyam Computer Services posted a half-year net of Rs 337 million against Rs 150.7 million a year ago and analysts forecast Rs 650 million for 1998-99 versus Rs 390.76 million in 1997-98.

Others feel that some top Indian software firms should show more growth because they have started moving higher up in the value chain, working on enterprise resource planning, network design, multimedia software and Internet services.

"Companies like Wipro and Infosys have achieved critical mass at the international level and that will make getting bigger and better projects easier," says Hiren Gada, senior investment analyst with Euroasian Securities.

- Compiled from the Indian media

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