IT services company Infosys on July 15 reported a 2 percent decline in June quarter profit at Rs 4,233 crore, ahead of a CNBC-TV18 analysts' poll that had pegged the number at Rs 3,950 crore, on strong operating performance, as the company surprised the street by giving full-year constant currency revenue growth guidance.
Revenue from operations increased 1.7 percent sequentially to Rs 23,665 crore in the June quarter and dollar revenue fell 2.4 percent quarter-on-quarter to $3,121 million for the quarter (against CNBC-TV18 analysts' estimates of Rs 23,000 crore and $3,038 million, respectively).
Constant currency revenue for the quarter fell 2 percent on a sequential basis, which was much better than street estimates of 5 percent decline QoQ.
“Our Q1 results, especially growth, are a clear testimony to the relevance of our service offerings and deep understanding of clients' business priorities which is resonating with them in these times. It also demonstrates the remarkable dedication of our employees and leadership during this period," said Salil Parekh, CEO and MD.
"Our confidence and visibility for the rest of the year is improving driven by our Q1 performance and large deal wins."
Infosys expects its constant currency revenue growth in the range of 0-2 percent and operating margin at 21-23 percent for FY21 while the deal wins for the June quarter stood at $1.7 billion against $1.65 billion in the previous quarter.
Digital revenues at $1,389 million (against $1,341 million QoQ) contributed 44.5 percent to total revenue in June against 41.9 percent in the previous quarter.
Infosys has added two clients in $10 million+ band, 11 clients in $1 million+ category, but lost three clients in $100 million+ band and one client in $50 million+ category. Total active clients at the end of June quarter stood at 1,458, up from 1,411 in the previous quarter.
At the operating level, earnings before interest and tax (EBIT) jumped 8.9 percent sequentially to Rs 5,365 crore and margin expanded 150 bps to 22.7 percent in June quarter, which both were much ahead of CNBC-TV18 poll estimates of Rs 4,773 crore and 20.75 percent respectively. Operating expenses fell 8.5 percent QoQ for the quarter.
"Operating margin expanded to 22.7 percent driven by preemptive deployment of our strategic cost levers along with tactical opportunities triggered by the COVID situation," Nilanjan Roy, CFO said.
"Collections were robust and capex was focused, which led to 50 percent year-on-year increase in free cash flows. Our liquid and debt-free balance sheet is a huge source of strength in these times," he added.
The country's second-largest IT company also announced a strategic partnership with Vanguard, which will deliver a technology-driven
approach to plan administration and fundamentally reshape the corporate retirement plan experience for its sponsors and participants.
Meanwhile, the company appointed Bobby Parikh as an Independent Director.
The stock gained 22.1 percent in the June quarter and 7 percent year-to-date, outperforming the Nifty IT index, which rallied 15 percent and fell nearly 6 percent in the same periods.
In a statement during the 39th AGM , Parekh said the company was $12.8 billion in size, with 2,40,000 employees across 46 countries.
"We are in excellent financial strength as we closed the year FY20. We had $3.6 billion of cash on our balance sheet with zero debt," he added.
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