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Last Updated : Apr 12, 2019 05:53 PM IST | Source: Moneycontrol.com

Infosys Q4: PAT up 13%, company lowers growth guidance for FY20

Dollar revenue for the quarter stood at at $3,060, growing 2.44 percent sequentially.

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Country's second largest IT services provider Infosys, on April 12, reported better-than-expected March quarter profit growth of 12.88 percent sequentially, but lowered its FY20 revenue growth guidance amid likely global growth worries.

Profit for the quarter at Rs 4,074 crore was ahead of CNBC-TV18 poll estimates of Rs 3,910 crore. Q3FY19 margin had a one-off impact from declassification of Panaya and Skava from assets held for sale.

Revenue in rupee terms during the quarter grew by 0.6 percent sequentially to Rs 21,539 crore and dollar revenue increased 2.44 percent QoQ to $3,060 million, which both were in line with analyst estimates.

For the year, company's revenue in constant currency grew 9 percent and margin stood at 22.8 percent against guidance of 8.5-9 percent and 22-24 percent respectively.

"We have completed the first year of transformation journey with strong results on multiple dimensions including revenue growth, performance of digital portfolio, large deal wins, and client metrics," Salil Parekh, CEO and MD said.

This is a reflection of increased client relevance stemming from focus on digital, positioning, and longstanding client relationships, he added.

The only concern to Street was its conservative full year guidance and that is why analysts expect around 1-3 percent correction in share price on April 15 opening.

The software firm expects constant currency revenue growth at 7.5-9.5 percent for financial year 2019-20 which was lower than analyst estimates of 8-10 percent. It sees EBIT margin at 21-23 percent for the year, which was in line with estimates.

"The likely slowdown in US spending in second half of calendar year could be reason of conservative guidance by the company. Also we yet to see sizeable recovery in BFSI vertical as there are some issues in North America," Amit Chandra of HDFC Securities told CNBC-TV18.

Harit Shah of Reliance Securities also said keeping conservative guidance due to likely US slow down in second half of FY20 keep enough space for company to beat its guidance. The analyst had expected 8-10 percent revenue guidance.

Shah sees 1-3 percent correction in stock on Monday morning.

Prakash Diwan of Altamount Capital also agreed, saying markets are unlikely to be excited on Monday especially after the run-up we have seen in the stock. "These numbers don't warrant continuation of the excitement which we saw in the last one year."

Infosys rallied 33 percent in last one year and 13 percent, so far, in 2019.

Its digital revenues in Q4 at $1,035 million (33.8 percent of total revenues) registered a sequential growth of 9.7 percent in constant currency and 41.1 percent year-on-year.

Infosys had another quarter of over $1.5 bn large deal TCV in Q4, as a result of which FY19 TCV doubled over FY18.

"Realisation per billed employee was steady which reflects increasing usage of automation in core services and faster growth in newer digital services," Pravin Rao, COO said.

"Overall attrition remained high and we are continuing focus on arresting the same," he added.

Infosys' consolidated attrition at 20.4 percent in Q4 was higher compared 19.9 percent in Q3.

"Attrition is very high compared to TCS (11.3 percent), so maintaining margin is a challenge for the company. Margin is going to be a concern, partly due to cost of transition in large deals," Amit Chandra of HDFC Securities said.

At operating level, earnings before interest and tax (EBIT) declined 4.4 percent quarter-on-quarter to Rs 4,618 crore in Q4 and margin contracted to 21.4 percent against 22.57 percent in Q3.

Its active clients at the end of March quarter were at 1,279 against 1,251 in December quarter. Infosys added 2 clients in $100 m+ band and 1 client in $50 m+ category. It added 8 clients in $10 m+ & 11 clients in $1 m+ categories.

Its North America business grew 3.7 percent in constant currency terms and 3.8 percent in reported terms while Europe revenue registered a 1.4 percent sequential growth in constant currency terms & 1.7 percent in reported terms.

However, Rest of the World business degrew 1.3 percent in CC terms & 0.6 percent in reported terms. India revenue also declined 9.1 percent in CC terms & 7.9 percent in reported terms QoQ.

Financial services business fell 0.8 percent in constant currency growth and 0.4 percent in reported terms. Retail also registered a 0.9 percent degrowth in constant currency terms and 0.8 percent in reported terms QoQ.

However, communication revenue grew 16.6 percent in constant currency and 16.8 percent in reported terms.

Company declared interim dividend of Rs 10.50 per share.

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First Published on Apr 12, 2019 04:20 pm
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