Comments
Armed with contracts worth $3 billion in the 2018 fiscal, and a revamped digital strategy, Infosys is hoping to grow at a faster clip.
In a call with analysts, COO Pravin Rao said that Infosys had seven large deal wins in the January-March quarter, which amounted to a Total Contract Value (TCV) of $905 million. However, in the last twelve months, large deal TCV declined by 12 per cent when compared to 2017. TCV indicates the total possible value of a deal but cannot be shown in the books.
A see-saw year
India’s second largest software major has been going through a see-saw year, partly due to spat between the co-founders and former CEO Vishal Sikka, which ultimately resulted in the latter quitting the company. Along with technology shifts, a stricter H-1B visa environment resulted in the company revising its guidance repeatedly last fiscal. Finally, Infosys grew its topline by 7.2 per cent, its lowest in as many years.
While Rao was optimistic about Infosys’ prospects in the 2019 fiscal, he also cautioned that certain top accounts in the US are witnessing some toughness. Infosys gets in excess of 70 per cent of its revenues from the US and BFSI segment. Absence of growth uptick in BFS (excluding Insurance) and Retail &CPG vertical which together account to 39 per cent of total revenues is a concern. Tepid growth in developed markets is also a concern, said Urmil Shah, IT Analyst, IDBI Securities.
The insurance industry continues to be impacted by changing technologies and consumer behaviour and insurance companies are under pressure to innovate fast. Among verticals, BFSI vertical revenues were up 0.1 per cent QoQ in constant currency and Retail &CPG vertical revenues were down 0.7 per cent QoQ in constant currency. Among Geographies, North America revenues were up 0.1 per cent QoQ in constant currency and revenues from Europe were down 0.2 per cent QoQ in constant currency.
New account openings
We expect growth for us in the vertical driven by new account openings and our offerings around McCamish and NIA, said Rao.
The larger play of Infosys around its 4 pillar strategy laid out by CEO Salil Parekh is expected to reap dividends soon. Also, the US economy in early stages of an economic rebound is expected to be good news for Indian outsourcing companies. “Strong traction in Europe and ‘green-shoots’ in North American market are positives,” said Madhu Babu, Research Analyst-Institutional Equities, Prabhudas Lilladher.
Infosys is not out of the woods as yet and this is reflected in the guidance (6-8 per cent in constant currency for 2019).
Shareholders rewarded
Infosys announced that as per the capital allocation policy for fiscal 2019, the Board has decided to pay off $2 billion (₹13,000 crore) and a special dividend of ₹10 per share, which translates into additional payout of $400 million. This $2 billion or approximately 4 per cent of its equity has been planned through a share buyback later this year.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.