Infosys weathers global macro headwinds

Vivek Ananth BL Research Bureau | Updated on October 12, 2019 Published on October 11, 2019

IT major Infosys posted a 6.2 per cent rise in consolidated net profit in the September quarter at ₹4,073 crore compared to the quarter ended June, helped by good performance of financial services, manufacturing and energy, and utility segments. The company seems to have weathered the global macro-economic slowdown with revenues growing 3.8 per cent quarter-on-quarter to ₹22,629 crore helped by growth in Europe and North America.

The company reported earnings before interest and tax (EBIT) margins of 21.7 per cent during the quarter compared to 20.5 per cent in the June quarter. This is near the middle of its 2019-20 margin guidance of 21-23 per cent. During the quarter ended September, Infosys won $2.8 billion worth of projects compared to $ 2.7 billion in the June quarter. Infosys upped the lower band of its revenue growth guidance to 9-10 per cent from 8.5-10 per cent.

Segmental performance

Financial services segment saw revenues rise 4.2 per cent quarter on quarter, faster than the growth seen during the June quarter. Manufacturing segment saw revenues rise by 7.9 per cent compared to a fall of 1.8 per cent during the quarter. This shows that despite the global macro-economic slowdown, the company is posting good revenue growth.

Despite a robust performance overall during the quarter, the slowdown did show up in the company’s retail segment’s performance. Revenue from retail segment fell 1.4 per cent during the quarter to $488 million. This segment usually bears the impact of macro-economic slowdown, the company’s management said. Revenue from communication segment fell 2.7 per cent.

Geographical performance

Most geographies performed well during the quarter ended September. There seems to have been no major impact of the slowdown in Europe on the company’s revenues from the region. Revenues from Europe grew 4.7 per cent in the September quarter compared to June.

The North American region saw revenue growth to slow a bit. In the quarter ended September, revenues from North America rose 2.2 per cent sequentially compared to 3 per cent in the June quarter. Rest of the world saw revenues falling 3.2 per cent quarter-on-quarter, while India revenues posted a 20.4 per cent sequential growth rise during the quarter.

With a robust pipeline of projects, and an upgrade in the revenue guidance, Infosys ended the first half of 2019-20 better than TCS.

Published on October 11, 2019
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