Finally, A Revenue Booster for Infosys

Bengaluru, 21 July

After a long wait, Infosys, India’s second- largest information technology services company, seems to have finally achieved the kind of growth that had been eluding it for the past few years.

For the quarter ended June, the company reported seven per cent sequential growth in revenue, the highest in the past 15 quarters, even as it reported a decline in net profit and operating margin compared to the March quarter. The management has often argued that once growth returned, everything else would fall into place, whether it was profitability or attrition.

On a year- on- year basis, Infosys’s net profit increased five per cent to ₹ 3,030 crore. At ₹ 14,354 crore, revenue increased 12.4 per cent yearonyear, much ahead of the consensus analyst estimates, backed by strong order wins and growth across all key geographies and business verticals.

The robust sales growth was well supported by volume growth (growth in billed manpower during the quarter) of 5.4 per cent, the highest in the past 19 quarters. This was even better than the volume growth of 4.8 per cent reported by larger peer Tata Consultancy Services for the June quarter.
Infosys’s better- than- expected performance had an instant effect on bourses, with the stock opening seven per cent higher in morning trade.

It closed at ₹ 1,112.65 on the BSE, a rise of 11.05 per cent over the previous day’s close. Infosys’s gains also rubbed off on other IT stocks, with the S& P BSE IT index gaining 4.57 per cent on a day when the overall stock market closed 0.84 per cent lower.

On a sequential basis, net profit fell 2.1 per cent, while revenue grew seven per cent. The management, however, desisted from terming the June quarter a ‘ turnaround’ one and reiterated the biggest contributor to performance was “ operational efficiency”.

According to Bloomberg consensus estimates, Infosys’s revenue and net profit were pegged at ₹ 14,067 crore and ₹ 3,021 crore, respectively.

In dollar terms, net profit stood at $ 476 million, down 1.3 per cent on a year- on- year basis and 4.5 per cent lower than in the March quarter.

At $ 2,256 million, revenue grew 5.7 per cent and 4.5 per cent on a year- on- year and sequential basis, respectively.

 “I am very pleased with our performance in the first quarter. Our efforts in redesigning our clients’ experience and our widespread adoption of innovation, both in grassroots and breakthroughs, are starting to bear fruit in large deal wins and growth of large clients,” said Chief Executive Officer and Managing Director Vishal Sikka. “ I believe that is the result of the initiatives we have taken and the deep client focus we have brought.” On the back of increasing visibility and a better deal pipeline, the company raised its full- year dollarterm revenue growth estimate to 7.29.2 per cent, compared with 6.2- 8.2 per cent, which it had announced at the beginning of the quarter.

Reference - http://epaper.business-standard.com/bsepaper/svww_index1.php