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Last Updated : Jul 12, 2019 08:09 PM IST | Source:

Infosys Q1 profit falls 6.8%, raises FY20 constant currency revenue guidance to 8.5-10%

Consequently Infosys increased its FY20 revenue growth guidance range to 8.5-10 percent in constant currency, from 7.5-9.5 percent earlier and maintained operating margin guidance range of 21-23 percent.

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Software services provider Infosys' June quarter profit fell 6.8 percent sequentially but raised its full-year constant currency revenue guidance to 8.5-10 percent.

Profit for the quarter ended June 2019 stood at Rs 3,802 crore, down from Rs 4,078 crore in March quarter.

Revenue in rupee terms grew by 1.2 percent quarter-on-quarter to Rs 21,803 crore, the company said in its BSE filing.


Dollar revenue showed a 2.3 percent sequential growth at $3,131 million and constant currency revenue growth came in line with street estimates at 2.8 percent.

"We had a strong start to FY20 with constant currency growth accelerating to 12.4 percent on YoY basis and digital revenue growth of 41.9 percent. This was achieved through our consistent client focus and investments which have strengthened our client relationships," Salil Parekh, CEO and MD said.

Consequently, Infosys increased its FY20 revenue growth guidance range to 8.5-10 percent in constant currency, from 7.5-9.5 percent earlier and maintained operating margin guidance range of 21-23 percent.


“First quarter results and continued focus on operational efficiencies gives us the confidence on our revenue and margin guidance for the year," said Nilanjan Roy, CFO.

Company said digital revenue for the quarter at $1,119 million (35.7 percent of total income) registered year-on-year growth of 41.9 percent and sequential growth of 8.6 percent in constant currency," the IT company said.

Large deal total contract value (TCV) was highest ever at $2.7 billion for Q1. "Segment growth was robust with all large regions and most verticals growing at double digits YoY in constant currency," Pravin Rao, COO said.

Brokerage house ICICI Direct remains positive on the stock as healthy deal wins, digital growth story and upward revision in guidance augurs well for the company.

"In terms of geography performance, revenue growth was led by North America and Rest of World which grew 3 percent and 2.3 percent QoQ in dollar terms respectively. Among verticals growth was led by energy & utilities (up 4.7 percent QoQ) and communication vertical (up 4.6 percent QoQ)," it said.

Infosys added two clients in $100 million+ category and six in $10 million+ band, with active clients increasing to 1,336 at end of June quarter from 1,279 in earlier quarter.

Overall numbers are largely in line with analyst estimates. A CNBC-TV18 poll estimates for profit were at Rs 3,702 crore on revenue of Rs 21,776 crore. Dollar revenue estimated at $3,134 million and constant currency revenue growth at 2.8 percent for the quarter ended June 2019.

At operating level, earnings before interest and tax (EBIT) declined 3.2 percent sequentially to Rs 4,471 crore and margin contracted 90 bps to 20.5 percent in Q1FY20, against CNBC-TV18 poll estimates of Rs 4,400 crore and 20.2 percent respectively.

Other income during the quarter increased 10.7 percent quarter-on-quarter to Rs 736 crore while tax cost jumped 13.3 percent to Rs 1,365 crore in Q1.

Continuing with objective of improving shareholder returns, Infosys has revised its capital allocation policy upwards to distribute around 85 percent of free cash flows cumulatively over a 5-year period, CFO Nilanjan Roy said.

The company’s current policy is to pay up to 70 percent of the free cash flow annually by way of dividend and/or buyback. The board has reviewed and approved a revised capital allocation policy of the company after taking into consideration the strategic and operational cash requirements.

Consolidated and standalone attrition rate for the quarter was higher at 23.4 percent (20.4 percent QoQ) and 21.5 percent (18.3 percent QoQ).

But high performance attrition is still low and there is no impact of attrition on deliverables, said Salil Parekh while addressing press conference. "Attrition is seasonal, involuntary attrition is part of it."

The company has made an additional investment of $6 million in Trifacta Inc, taking the total investment in the company to $10 million.

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First Published on Jul 12, 2019 04:12 pm
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