Infosys’s numbers for the September quarter - both revenue and profits - were well ahead of the market’s expectation for the second quarter in a row.

The company has recorded a sequential revenue growth of six per cent (in dollar terms) against the expected 3.6 per cent. Volume growth was about 3.7 per cent.

Strong growth in North America (6.1 per cent vs. 5.1 per cent in June quarter) and Europe (8.3 per cent versus 1.2 per cent), higher traction in financial services and retail segment and improved pricing helped. The company added 24 new (net) clients and received three fresh orders in the $75 million plus bucket.

In rupee terms, revenue growth came in at 8.9 per cent sequentially.

Attrition (on standalone basis) was 14.1 per cent, lower than 14.2 per cent in the June quarter and 21.1 per cent in the September 2014 quarter. Utilisation stood at 81.3 per cent for the quarter, up by over one percentage point sequentially.

Margin surprise

Infosys reported a 12.1 per cent sequential growth in net profit (in rupee terms). In the June quarter, it had reported a 2.1 per cent decline in net profit.

Operating profit margins improved 1.52 percentage points (versus market expectations of a 90-100 basis points gain) from the June quarter to 25.54 per cent, thanks to improved utilisation, advantageous cross-currency movements (by about 70 basis points) and better operational efficiency.

Compared to a year ago, however, the margin was 0.46 percentage points lower.

Lower dollar guidance

Infosys maintained its constant currency revenue guidance for FY16 at 10-12 per cent, but revised the dollar guidance down. From 7.2- 9.2 per cent earlier, the revenue guidance for FY16 in USD terms was cut to 6.4-8.4 per cent. Nasscom’s target for the industry for the year was 12-14 per cent.

The company’s management expects segments, including insurance, retail and energy, to witness some pain in the second half of the year as clients cut down costs. Further, headwinds on a few orders and the outlook on currency rates have been taken into account on arriving at the guidance, said the company.

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