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Infosys has delivered better-than-expected numbers in the second quarter on the back of $2-billion deal wins while maintaining the annual guidance.
India’s second-largest software exporter reported a 10.3 per cent increase in the July-September quarter net profit at ₹4,110 crore on a year-on-year basis and 13.8 per cent growth on a sequential basis. Its revenues grew 17.3 per cent to ₹20,609 crore on a year-on-year basis, on the back of recent deals such as Verizon, which it bagged for ₹5,000 crore. “We are in a comfortable position going into the second half of the fiscal and have overcome some of the account-specific issues of the past,” said CEO Salil Parekh.
On a quarter-on-quarter basis, the topline grew 7.7 per cent, aided by a combination of a weaker rupee and pricing benefits, but these were offset by investments and pay hikes to senior-level employees. The operating margin remained flat at 23.7 per cent, lower than the expected 24.4 per cent.
In his third quarter since taking charge, Parekh who has chalked out a three-year blueprint, also retained revenue growth guidance of 6-8 per cent, in line with analysts’ expectations.
Revenue in dollar terms increased 3.2 per cent quarter-on-quarter to $2,921 million and 4.2 per cent in constant currency basis. “While Infosys has delivered better-than-expected numbers on the topline and the bottomline, margins’ performance missed the mark,” said Sanjeev Hota, AVP Research at Sharekhan.
However, Infosys cheered investors with an interim dividend of ₹7 per share, in addition to a bonus issue of shares. In April this year, the company had identified an amount of up to ₹10,400 crore to be paid out to shareholders for the financial year 2019.
Digital drive
Digital, towards which most Indian outsourcing companies have pivoted, is now a $905-million business, and contributes 31 per cent to revenues. Attrition continued to remain high at 22.2 per cent.
Infosys also said it would comply with the arbitration award asking the company to pay ₹12.17 crore and interest to former Chief Financial Officer Rajiv Bansal.
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