Infosys to Mull Returning Cash, Making More Acquisitions

Infosys Ltd. (INFO), India’s second- largest software exporter, may consider returning money to shareholders and making acquisitions to utilize the biggest amount of cash among outsourcers in the south Asian country.

“We will look at both,” Co-Chairman S. Gopalakrishnan said in an interview with Bloomberg Television from Tianjin, China. “Periodically, we have been returning some of the cash through special dividends. And we will also look at acquisitions, but we don’t want to do an acquisition for an acquisition’s sake.”

The Bangalore-based company said earlier this week it agreed to buy Swiss management consulting company Lodestone Holding AG for 330 million Swiss francs ($352 million) in its biggest acquisition. The purchase may help Infosys meet its goal of securing a third of its revenue from consulting and systems integration work amid rising competition in outsourcing from Tata Consultancy Services Ltd. (TCS) and International Business Machines Corp.

Infosys had 206 billion rupees ($3.7 billion) in cash and cash equivalents as of June 30, according to a company statement -- the most among Indian software developers. Mumbai-based Tata Consultancy, India’s biggest software exporter, had 96 billion rupees in cash and short-term investments at the end of June, according to data compiled by Bloomberg.

Infosys paid its shareholders “special cash” once every two years since at least 2004, according to data compiled by Bloomberg. The company paid out 12.50 rupees a share in 2004, 15 rupees in 2006, 20 rupees in 2008 and 10 rupees in April, in addition to its normal dividends, according to data compiled by Bloomberg.

’Clear Slowdown’

The company’s shares rose 0.4 percent to 2,539.80 rupees as of 10:13 a.m. in Mumbai trading. The stock has declined 7.8 percent this year, the fourth-worst among the 30 shares in the benchmark Sensitive Index.

Revenue growth in U.S. dollars may slow to 6 percent to 8 percent in the year ending March, Gopalakrishnan said. Comparable sales increased 16 percent a year earlier. India’s information technology services and outsourcing industry will expand at least 11 percent this year, according to a forecast by the National Association of Software & Services Companies.

“The U.S. is on the way to recovery, or getting used to the environment,” Gopalakrishnan said. “But definitely Europe, financial services as an industry vertical -- these are the areas where there is a slowdown, clearly.”

To contact the reporters on this story: Anand Krishnamoorthy in Singapore at anandk@bloomberg.net; Rishaad Salamat in Hong Kong at rishaad@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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