Infosys Technologies was no longer perturbed by the fact that its results fell short of market expectations, moving ahead for the second day in a row on Wednesday.

Infosys Technologies advanced 2.1 per cent to Rs 4,544 on BSE in early trades on Wednesday.

A total of 49,973 Infosys shares were traded on BSE in the first few minutes of trading.

On Tuesday, Infy, the Infosys Tech ADR listed on Nasdaq, gained $4.37 or 6.7 per cent to $68.72. Two Infy ADRs are equivalent to one underlying equity share.

On Tuesday on BSE, Infosys gained 3.79 per cent to Rs 4,448.75.

The two-day rise follows a 10.6 per cent slump in two trading sessions following the Q3 results announced on Friday.

The scrip has been buoyant over the last few months. From Rs 3,005.90 on 29 July 2002, Infosys gained 59.5 per cent to Rs 4,796.40 on 9 January 2003 ahead of its Q3 results.

On Tuesday, foreign funds were believed to have conducted bargain hunting in Infosys at the lower levels. Dealers say Infosys' Q3 results are satisfactory even though some disappointment was evident in the market over the continuing pressure on billing rates, the pressure on profit margins and a guidance that gave for a tiny sequential net profit growth for Q4 ending 31 March 2003.

Market men say increased order flows for the software sector and the strong outsourcing trend will benefit the software major in the times to come.

For the third quarter ended 31 December 2002, Infosys posted a 9 per cent rise in sales to Rs 958.64 crore (Rs 9.586 billion) compared to quarter ended 30 September 2002.

Profit after tax (PAT) on a sequential basis rose 14 per cent to Rs 256.31 crore (Rs 2.563 billion).

Infosys' software revenues in US dollar terms grew by 9.6 per cent for the quarter compared to the quarter ended 30 September 2002. Revenue growth comprised a volume growth of 10.5 per cent and a price decline of 0.9 per cent, compared to the SQ 2002 quarter.

While the onsite prices fell by 0.2 per cent q-o-q, the offshore price fall was 1.6- per cent q-o-q.

There was a 13 per cent rise in software development expenses, which impacted the operating margins (OPM). Selling and marketing expenses witnessed a jump of 6.2 per cent q-o-q to Rs 73.6 crore (Rs 736 million).

The management indicated that the selling and marketing expenses might move further up in future as the company plans to invest in brand promotion, various marketing events and customer interactions.

It maintains that these investments are for future growth of the company. Analysts say the heavy investment in sales and marketing will bear fruit in the coming months. OPM fell to 34.8 per cent from 36.7 per cent in the quarter ended 30 September 2002.

Infosys added 23 new clients in Q3 (18 during the quarter ended 30 September 2002 quarter) including Bristol-Myers Squibb, AT&T Wireless, TTPCom and Compass Bank.

The total number of active clients stands at 315 (308 for the quarter ended 30 September 2002).

For the quarter ending 31 March 2003, Infosys expects income from software development services and products to be in the range of Rs 975 crore (Rs 9.57 million)-Rs 989 crore (Rs 9.89 million) translating into 1.7 per cent-3.2 per cent growth on a sequential basis.

It expects its earnings per share to be between Rs 39.1 and Rs 39.4 translating into 1 per cent - 1.8 per cent growth in its bottom line on a sequential basis.

During the quarter ended 31 December 2002, Infosys had around 184 project start-ups. In the quarter ended 30 September 2002, it had around 250 project start-ups and in the quarter ended 30 June 2002, it had 400 projects start-ups.

Thus, the company is sitting on close to 834 project start-ups during the first nine months of this year. Initially, most of the projects are onsite and these are shifted offshore subsequently.

The key to Infosys' performance in future will be moving work offshore, which can improve its margins as well.

Infosys plans to sponsor an ADR issue against domestic shares. The purpose of sponsorship of an ADR issue against domestic shares is to increase liquidity of the ADR issue.

Based on current prices, the ADR trades at a 45  per cent premium to the local price.