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Hithere: Can you please tell me the total revenue, net profit and the percentage increase in net profit of Infosys?

Motawara: The revenue is Rs 226 crore and the net profit is Rs 74 crore. This is basically an increase of 66 per cent over the third quarter last year (adjusted for extraordinary items last year).

Sachin: Why does Infosys attract so much attention? Is it because it's one of the very few quality infotech companies in India?

Motawara: It attracts attention mainly because the management has consistently under-promised and over-delivered and has managed to build the company which is globally competitive by almost any benchmark.

Venkatesh.R: Why can't Infosys try to bring out an operating system that would break the monopoly of Windows and thereby challenge Bill Gates? What is the real barrier in doing that? Is it non-availability of resources or talent? Or that Mr. Narayan Murthy doesn't want to take the risk?

Motawara: Developing and marketing such a product requires a completely different set of skills than what Infosys has. Infosys specialises in services targeted to corporate customers and is essentially a follower of technology. Companies like Microsoft are pioneers in technology and have huge resources to establish their standards in the market.

Sdfg: I don't think Infosys can do anything like bringing operating systems. Most of Infosys is just because of the stock market hype. All Indian companies in the top bracket are equally good. It's just that the wind is blowing in Narayanamurthy's direction now (without belittling his achievements).

Motawara: One should notice the fact that Infosys has highest returns on capital employed in the business. This is a result of extraordinarily high margins that the company is able to command. Higher margins don't come for free. Clients will pay higher rates only if they see value.

Sudheendra holla: Do you think the share price will shoot up to Rs 20,000 within a month?

Motawara: No, I don't think Infosys is ready for such a sharp increase so soon.

Selva: Are you optimistic about the share price?

Motawara: I do think that the Infosys stock will outperform the market. This is because the earnings momentum continues to be strong. However, I don't think one should expect the superlative returns that it has delivered over last year.

Amit Khaneja: Will the correction in the share price happen soon? Also what is the expected correct value of this share?

Motawara: It is very difficult to make a call on a short-term market movement like a correction. However, I think that even from this price, within a year, Infosys will outperform the Sensex.

Rajesh: I feel that the price of Infosys will come down to Rs 7,000 to Rs 8,000 by this month end.

Motawara: I think Rs 8,000 looks too low for a company which is expected to deliver an EPS of Rs 150 next year. And it is expected to compound this number at over 60 per cent over the next five years.

Mohan: Can you elaborate on how it is globally competitive? As far as I am aware, they don't have a product/idea that can be called their own.

Motawara: Products is not everything. Infosys is very strong as far as project engineering and quality systems are concerned. Infosys is basically a services company and these are the factors that count. So, if one compares Infosys to the best American companies in this field like Cambridge and Sapient one can see the difference in the growth and returns between these companies. Cambridge and Sapient have returns on equity (ROE) in the region of 15 to 20 per cent whereas Infosys earns over 55 per cent. Secondly, Infosys' manpower is as well trained to take advantage of the oncoming e-commerce boom.

Mohan: Firstly, software is not a capital-intensive sector, so high return on capital is to be expected. Secondly, "high margins" are because of the dollar-rupee difference. I don't think Infosys charges anything more than $5000/person-month that any other company does.

Motawara: You are right. However, I meant Infosys earns much higher margins and returns than its peer group too. For example, Wipro's operating margin is just 29 per cent whereas Infosys earns over 37 per cent. Satyam's return on equity is 35 per cent whereas Infosys is over 55 per cent.

Igo: Isn't the net profit growth lower than expected at 90 per cent?

Motawara: Well it is slightly less at 85 percent. Last year the net profit was Rs 40 crore and this year it is Rs 74 crore. But the last 15 days of this quarter were fairly unproductive because of a Y2K red alert throughout the company.

Arvi1: What are the extraordinary items this time around?

Motawara: There are no extraordinary items this time. There is however an exchange rate difference of Rs 61 lakh.

James: With revenues from Y2K falling, do you think Infosys will have to get into euro conversions?

Motawara: Not to a great extent, Infosys' focus is on e-commerce which is a larger opportunity than even Y2K.

VijayS: I think the market was expecting more than 100 per cent growth. Also, people still do not have information on where the growth has come from. If the growth is in "other income" then that is bad news. Finally, the market is awaiting the response in GDR price which will determine the trend in India.

Motawara: Revenue has grown 62 percent. Other income has gone from virtually nothing to Rs 7.7 crore.

Triple: How will the future growth come?

Motawara: Future growth will come from new avenues like e-commerce and traditional areas like maintenance and migration. We expect revenue growth to be over 70 per cent this year. It is not difficult as the non-Y2K revenues growth has been much higher than that this year.

Arvi1: What is Infosys doing in e-commerce?

Motawara: Infosys addresses two markets in e-commerce services. The first market is the dot.com market which comprises essentially e-commerce start-ups. And here the job is to provide end-to-end solutions for e-commerce transactions. The other market is the large traditional corporations. Here the task is to web-enable their legacy system.

Navin: Where do u think the market is headed in terms of IT stocks?

Motawara: It's difficult to give a short-term forecast. But over the year, the sector will continue to outperform the market. One must remember that as far as global strength is concerned, Indian software companies were never stronger than they are now.

Negative: What is the real burden of the stock option on shareholders over say the next 2-3 yrs? Motawara: The new stock options scheme of Infosys issues shares at current market price. So, over the next two to three years, I don't think it will take away anything significant from the company's value. Value is lost only when options are issued at a discount to market price as they used to be issued earlier.

Rsrg: I have 500 shares of Infosys. Should I keep it?

Motawara: If you are a long term investor keep holding on to your shares.

Bimal Bosmia: Why is the stock falling down today?

Motawara: I think Infosys results are lower than expected. And that is why the stock price is falling.

Bimal Bosmia: Is it true that the current low price of Infosys is suppressed and can shoot up to Rs 20,000 (after the split)?

Motawara: It could happen that the price goes to Rs 20,000. But I think that then Infosys will be very overvalued.

mohan: How many employees does Infosys have now?

Motawara: Infosys has over 4,100 employees.

Nitins: Infy profits jumped 94 per cent but the market pulled down the share almost 5 per cent. What is the logic?

Motawara: Adjusted for extraordinary item last year, profits are up only 66 per cent. Hence the market is disappointed.

Motawara: Thank you. It was nice chatting with all of you. Goodbye.

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