Infosys Q2 profit rises 7%, FY18 constant currency revenue guidance cut to 5.5-6.5%

The country's second largest IT services provider reduced its full year constant currency revenue guidance to 5.5-6.5 percent from 6.5-8.5 percent earlier, which was on expected lines.

The company has retained its full year operating margin guidance at 23-25 percent and expects revenue growth at 3-4 percent in rupee terms.

Also read - Panaya deal given clean chit, could have better handled severance pay issue: Infy Board

"During the quarter, we responded quickly to the management and Board changes through proactive communication with all stakeholders minimizing any negative impact to the business and allowing us to deliver growth across all our large industry units," UB Pravin Rao, Interim CEO and Managing Director said.

The Street has been eagerly waiting for the announcement of new CEO, after Vishal Sikka resigned as CEO & MD in August. The company appointed UB Pravin Rao as interim CEO and MD while co-founder Nandan Nilekani became non-executive chairman in August.

"The process of identifying the next CEO and shareholder consultation outreach have been initiated and are progressing well," Infosys said.

It was mixed set of numbers as profit and operational earnings beat analysts' expectations but revenue missed estimates.

Profit was estimated at Rs 3,496 crore while rupee revenue was expected at Rs 17,630 crore (3.2 percent growth QoQ) and dollar revenue at USD 2,738 million (3.3 percent) for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

EBIT (earnings before interest and tax) stood at Rs 4,246 crore (up 3.3 percent QoQ) and margin at 24.2 percent (up 10 bps QoQ) for the quarter against CNBC-TV18 poll estimates of Rs 4,097 crore and 23.6 percent, respectively.

“Focus on improving operational efficiencies enabled us to deliver stable margins in the quarter and at the same time provide compensation increases and higher variable payouts to employees," MD Ranganath, CFO said.

The bottomline was supported by other income (that increased 8.5 percent QoQ) and lower selling & marketing expenses (down 4.7 percent) in Q2.

The software firm has added 72 clients (gross basis) during the quarter and active clients were at 1,173 at the end of September 2017, increased from 1,164 in June 2017.

It has added 1 client in USD 100 million category, 3 in USD 25 million band, 7 in USD 5 million and 14 clients in USD 1 million category.

The standalone attrition rate increased to 17.2 percent in Q2FY18, from 16.9 percent in previous quarter and consolidated attrition rate also inched up to 21.4 percent from 21 percent.

The utilisation including trainees improved to 81.8 percent (against 80.2 percent QoQ) and the same excluding trainees was at all-time high of 84.7 percent (against 84 percent QoQ) in July-September quarter.

Infosys has declared an interim dividend of Rs 13 per equity share.

Meanwhile, Infosys said after careful consideration led by the Chairman, the board reaffirmed the previous findings of external investigations that there is no merit to the allegations of wrongdoing.

The Chairman has conducted a review of all the external investigations into certain anonymous complaints the company had previously received. The review covered a range of matters, including the acquisition of Panaya which was completed by the company in February 2015 and the severance payments to the former CFO.