Info-tech

Infosys cuts revenue guidance but delivers relatively better Q2 results than TCS

Rajalakshmi Nirmal BL Research Bureau | Updated on January 27, 2018 Published on October 14, 2016

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Infosys has reported not-so-bad September quarter results. Sequential revenue growth in constant currency terms was 3.5 per cent (market had expected a 3 per cent growth) versus TCS’ 1 per cent. However, Infosys lowered its revenue guidance for the 2016-17 fiscal further to 8-9 per cent in constant currency terms. In the June quarter, the company had revised the guidance down to 10.5-12 per cent from its earlier estimate of 11.5-13.5 per cent. The management has cited increasing global uncertainty for its revision in guidance.

In the September quarter though, the performance across verticals was stronger on a sequential basis. The financial services segment recorded a 5.2 per cent growth in constant currency terms. The energy and utilities business segment grew 7.3 per cent.

The company indicated an increase in market share, especially in the retail vertical on use of the digital and automation platform. It also added that concerns in the consulting business in the previous quarter have been addressed.

The North America market grew by a strong 5.2 per cent sequentially in constant currency terms. TCS had recorded a growth of only 1.4 per cent in the region.

Infosys added 78 new clients during the quarter. In the June quarter, it had added 95 clients. The attrition rate improved marginally to 15.7 per cent, from 15.8 per cent in the June quarter.

Margins too improved. Operating profit margins expanded by about 80 basis points to 24.9 per cent. The improvement was a tad lower than the 90 basis points expansion in margins that TCS reported for the September quarter.

The stock, which hit a low of Rs 996 (down 5 per cent over yesterday’s close) immediately after opening, now trades at around Rs 1,035, down by about one per cent.

Published on October 14, 2016
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