Moneycontrol BureauInfosys' third quarter earnings beat analysts' expectations on Thursday with consolidated profit rising 1.94 percent sequentially to Rs 3,465 crore and revenue growing 1.7 percent to Rs 15,902 crore.
Dollar revenue for the quarter increased 0.6 percent to USD 2,407 million from USD 2,392 million on sequential basis and 1.1 percent in constant currency.
Infosys not only surprised analysts with October-December quarter earnings, but also with its full year guidance and attrition rate.
The software services exporter has revised dollar revenue growth guidance upwards to 8.9-9.3 percent from 6.4-8.4 percent earlier and also raised revenue guidance to 12.8-13.2 percent in constant currency from 10-12 percent earlier.
"Infoscions confidence in innovation and adoption of Aikido services by clients helped company deliver encouraging results despite the traditional seasonality of quarter and additional headwinds, and will strengthen the execution of strategy towards consistent profitable growth," says Vishal Sikka, CEO and MD.
Win rates have increased dramatically at Infosys, he adds.
According to average of estimates of analysts polled by CNBC-TV18, profit was expected to decline 2.9 percent sequentially to Rs 3,300 crore during the quarter while revenue estimated to rise 0.7 percent to Rs 15,748 crore but dollar revenue was seen flat at USD 2,390 million on sequential basis.
Even its overall performance was quite better than its closest peer TCS that reported 0.26 percent de-growth in dollar revenue and 0.5 percent in constant currency Q-o-Q.
MD Ranganath, CFO says Infosys will continue to focus on enhancing operational efficiency through multiple levers in the coming quarters.
Consolidated earnings before interest and tax (EBIT) declined 0.85 percent quarter-on-quarter to Rs 3,959 crore and margin contracted 60 basis points to 24.9 percent in quarter ended December 2015, which too was ahead of estimates. Analysts had expected EBIT de-growth of 2.3 percent and margin contraction of 80 basis points for the quarter.
Sikka says lower realisations impacted margin by 1.1 percent, adding realisations dropped by 2.5 percent during the quarter.
Clients
While addressing press conference, Sikka says Infosys won four large deals worth USD 350 million in Q3, adding the deal pipeline stood at USD 3 billion and the company is potentially close to winning a USD 600 million deal.
Clients under 50 million dollar category increased to 51 in Q3 from 50 in Q2 and in 25 million dollar category, clients rose to 89 from 85 during same period.
Active clients at the end of December quarter stood at 1,045, increased from 1,011 as of September quarter.
Infosys says it has strengthened relationships with key clients, including ALSTOM (global leader in rail transport), Japan-based Mitsubishi Aircraft Corporation and Mercedes Benz Research & Development Center, India.
Revenue by Geographical Segment and Service Offering
In October-December quarter, Europe business grew by 2.1 percent sequentially and 3.9 percent in constant currency. Revenue from India increased by 23.1 percent Q-o-Q and 24.3 percent in constant currency.
However, North America business declined by 0.6 percent Q-o-Q (0.5 percent in constant currency) and Rest of The World dropped by 0.1 percent.
During the quarter, financial services and insurance segment has registered a 2.7 percent sequential growth and 3.1 percent in constant currency. Energy, communication and services business also grew 4.2 percent quarter-on-quarter (4.6 percent in constant currency) but manufacturing declined 3.7 percent Q-o-Q (3.2 percent in constant currency).
Retail, CPG, logistics segment reported a 0.5 percent degrowth for the quarter.
Volume Growth and Attrition
Volume growth stood at 3.1 percent quarter-on-quarter. Healthy volume growth during the quarter has been encouraging, says UB Pravin Rao, president & COO, adding continued focus on employee engagement is paying dividends resulting in lower attrition.
Consolidated attrition rate for the quarter declined to 18.1 percent against 19.9 percent in preceding quarter and in same period, standalone attrition rate dropped to 13.4 percent from 14.1 percent.
Its utilisation rate including trainees was at 74.2 percent for the quarter against 75.4 percent in preceding quarter while utilisation rate excluding trainees stood at 80.6 percent compared to 81.3 on sequential basis.
Board Changes
The country's second largest software services provider has appointed Punita Kumar Sinha as independent director. It has also re-appointed Jeffrey S Lehman, independent director of the company for a term of two years with effect from April 14, 2016 to hold office up to April 13, 2018.
CSR & Infosys Foundation
For FY16, Infosys has pledged Rs 270 crore towards corporate social responsibility that is primarily being carried out through philanthropic arm Infosys Foundation.
As of December 2015, the Infosys Foundation has invested Rs 171 crore on areas related to education, healthcare, destitute care, arts & culture and rural development.
At 10:06 hours IST, the scrip of Infosys was quoting at Rs 1,135.25, up Rs 52.90, or 4.89 percent amid high volumes on the Bombay Stock Exchange.
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