Infosys beats estimates as profit up 2.8% on qtr at Rs 3,708 cr, cuts dlr revenue guidance

Infosys, the country's second largest software services exporter, on Friday said its net profit for the October-December quarter stood at Rs 3,708 crore, up 2.8 percent on quarter, but cut its dollar revenue projection for the current financial year.

The company's rupee revenue during the quarter declined 0.2 percent sequentially to Rs 17,273 crore and dollar revenue 1.4 percent to $2,531 million. In constant currency, dollar revenue was down 0.3 percent. During the quarter, Infosys reached revenue milestone of $10 billion. Sounding optimistic, Vishal Sikka, CEO and MD, Infosys, during the result announcement said he expects the company to reach milestone of $20 billion in revenue and 30 percent margin level by 2020.



The operating margins for the quarter expanded 0.2 percent to 25.1 percent and net margins 0.6 percent to 21.5 percent sequentially. The company's operating margin beat street expectations, as analysts anticipated the number at 24.5 percent for the quarter.

According to the company, the attrition rate declined sequentially by 0.8 percent on a standalone basis and 1.6 percent on consolidated basis.

However, the company revised its FY17 revenue guidance in constant currency to to 8.4-8.8% from 8- 9 percent. More importantly, the full-year dollar revenue guidance has been cut sharply to 7.2-7.6 percent from 8.6-9 percent. It is to be noted that this is the third guidance cut by the company this financial year.

A CNBC-TV18 poll had estimated the net profit at Rs 3,569 crore on revenue of Rs 17,313 crore and dollar revenue at $2,560 million for the quarter.

At 10:22, the shares of Infosys on the BSE were down around a percent after rising about 4.5 percent in the early trades.

"Taking into account seasonal and other additional headwinds for the quarter, our Q3 revenue performance was broadly in line with our expectations," said Vishal Sikka, CEO and MD, in the press release.

"Beyond the quarterly numbers, we continue to focus sharply on the execution of our strategy, as reflected in the growing embrace of AI-based automation, growth in our new software-led business, delivering innovation, both incremental & breakthrough and fostering a learning-led culture. Our annual client survey results show highest customer satisfaction since we started the survey 12 years ago and increased adoption of Zero Distance and lowered attrition, especially amongst top performers – these are some of the key indicators of the growing creative confidence of Infoscions," he said.

“In a seasonally soft quarter, our utilization has remained healthy.” said U B Pravin Rao, COO, in the press release. “Our continued efforts to improve employee engagement and experience resulted in a reduction in attrition. During the quarter, we added 77 clients and also added 2 clients in the $ 75mn+ revenue category. I would like to congratulate all stakeholders on crossing the $ 10 bn revenue milestone on LTM basis.”

MD Ranganath, CFO, meanwhile, said the company's cash generation during the quarter was strong.

Despite sluggish numbers, the software giant reported highest ever utilisation rate of 81.9 percent in Q3.

On the region specific businesses overseas, Infosys said European business declined by 2.5 percent sequentially but rose 1.1 percent in constant currency terms, while North America declined by 0.6 percent in both sequential and constant currency terms.

Among the verticals, BFSI was the only vertical to have witnessed positive constant currency growth. However, the company also said it is witnessing good traction in autos, hi-tech and hopes for an improvement in Q4.

Vishal Sikka also said immigration policies may change and expect newly elected US president Donald Trump's policies to be business friendly.

The CEO also indicated that there will more changes in Infosys' management going ahead, but declined to give any time frame on the likely changes.

Published Date: Jan 13, 2017 10:13 AM | Updated Date: Jan 13, 2017 11:12 AM

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