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Last Updated : Jan 13, 2020 01:46 PM IST | Source: Moneycontrol.com

Infosys Q3 profit jumps 11%, raises FY20 revenue guidance to 10-10.5%

The deal wins for the quarter at $1.8 billion was lower than $2.8 billion reported in previous quarter.

 
 
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Infosys, the country's second-largest software services company, has reported an 11 percent sequential growth in the third quarter (October-December) consolidated profit, with upward revision in full year revenue guidance.

Profit for the quarter increased to Rs 4,457 crore (which was ahead of analyst estimates), from Rs 4,019 crore QoQ, driven by higher other income and lower other expenses. The year-on-year profit growth was 23.5 percent.

Consolidated revenue during the quarter ended December 2019 grew 2 percent sequentially to Rs 23,092 crore, company said in its BSE filing.

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The dollar revenue growth was 1 percent QoQ at $3,243 million in Q3, and it was same in constant currency at 1 percent QoQ (up 9.5 percent YoY) against 3.3 percent in Q2FY20 and 2.7 percent in Q3FY19.

"Q3 results further underscore that we remain steadfast in our journey of sustained client relevance and deepening engagement with them, as they partner with us in navigating their next in the digital transformation era," said Salil Parekh, CEO and MD.

"For us, this has translated into double digit growth year-to-date, leading to an increase in revenue guidance, accompanied by expanding operating

margins," he added.

The IT company revised its full year constant currency revenue growth guidance to 10-10.5 percent, from 9-10 percent earlier, but maintained its EBIT margin forecast 21-23 percent for FY20.

"I like that the company raised its full year revenue guidance, which is a big deal given the seasonally weak guquarter for entire sector. Company is looking double digit growth now is very good," Moshe Katri, MD of Wedbush Securities said in an interview to CNBC-TV18.

Infosys said digital revenue in Q3 at $1,318 million (contributed 40.6 percent to total revenue) showed a 40.8 percent year-on-year growth and a sequential growth of 6.8 percent in constant currency.

"Overall performance during the quarter was satisfactory on multiple counts – broad-based growth, steady increase in client metrics and healthy large deal wins," Pravin Rao, COO said, adding large deal wins

continued to be robust with growth of 56 percent so far this year.

The deal wins for the quarter at $1.8 billion was lower than $2.8 billion reported in previous quarter.

"The last quarter had a big chunk in deals came from Verizon ($700 million), but overall deal wins were quite good for the quarter," Urmil Shah, VP & Research Analyst at IDBI Capital told CNBC-TV18,.

He expects the optimism to continue in Q4 and expects the company to increase its top end of constant currency revenue guidance to 11 percent.

Numbers, barring profit, were largely on expected lines. Profit was expected at Rs 4,200 crore on revenue of Rs 23,190 crore for the quarter and constant currency was estimated at 1 percent, according to average of estimates of analysts polled by CNBC-TV18.

Infosys said year-to-date revenues grew by 11.1 percent in constant currency and operating margin came in at 21.4 percent, within the margin guidance for the year.

At operating level, consolidated earnings before interest and tax (EBIT) grew by 3.1 percent sequentially to Rs 5,064 crore and margin expanded by 20bps to 21.9 percent driven by relentless cost optimisation and

operating leverage, which both were lower than poll of CNBC-TV18 which was pegged at Rs 5,180 crore for EBIT and 22.34 percent margin.

Consolidated attrition rate fell to 19.6 percent for the quarter ended December 2019, from 21.7 percent in September quarter. "We had a further reduction in attrition, demonstrating the results of our continued efforts towards strengthening employee engagement and value proposition," Rao said.

The gross addition of clients during the quarter at 84 was lower than 96 clients addition seen in September quarter and 101 clients in December 2018.

The software company added 1 client in $100 million+ category, 4 in $10 million+ band and 12 clients in $1 million+ category.

Meanwhile, the Audit Committee determined that there was no evidence of any financial impropriety or executive misconduct after the independent investigation into allegations contained in the anonymous whistleblower complaints.

"The clean chit from auditors in whistleblower complaints is a positive news, but again I don't think this was an issue at Infosys," Moshe Katri said.

The stock was one of biggest underperformers during the third quarter (October-December), falling more than 9 percent as against Nifty IT, which was up 0.72 percent, and Nifty50 that gained 6 percent, mainly due to a whistlblower complaint.

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First Published on Jan 10, 2020 04:31 pm
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