Infosys, on Friday, cheered the investors by reporting a strong growth in the second quarter ended September 30, 2014. The city-based IT company reported a consolidated net profit of Rs.3,096 crore against Rs.2,407 crore in the year ago period, up 28.6 per cent. On a quarterly basis, the net profit witnessed a growth of around 7.3 per cent when compared to the previous quarter.
The company also surprised the investors by announcing 1:1 bonus issue of equity shares and 1:1 stock dividend of American depository shares, to increase liquidity of its shares and expand the retail shareholder base. The move to issue bonus shares for employees is after eight years. The board also declared an interim dividend of Rs.30 a share
The consolidated revenue for the reported period rose by 2.9 per cent to Rs.13,342 crore from Rs.12,965 crore in the corresponding period last year. In dollar terms, the net profit increased 6 per cent sequentially, and the total revenue grew by 3.1 per cent. The company held liquid assets, including cash and cash equivalents, certificates of deposits and government bonds, worth Rs.33,616 crore at the end of September 30, 2014. Going forward, the company expects its revenue for the full fiscal year to grow 6.7-8.7 per cent.
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During the quarter, Infosys and its subsidiaries added 49 clients, and also made a gross addition of 6,682 employees. At the end of the second quarter, there were 1.65 lakh employees. The attrition rate went up to 20.1 per cent from 19.5 per cent quarter ago and 17.3 per cent year ago.
“Digital transformation is reshaping the business of every one of our clients. We see this as a great opportunity to help them renew the core of their business as well as to expand into new frontiers and are seeing early positive results,” said Infosys’ newly appointed Chief Executive Officer and Managing Director Vishal Sikka.
Infosys revenues from the major geographic such as North America and Europe increased marginally to 60.8 per cent and 24.7 per cent, respectively. The company’s revenues from the Indian business witnessed a drop in growth and stood at 2.2 per cent in the second quarter when compared to 2.4 per cent previous year.
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On the margins front, the company posted 100-basis point sequential expansion in its operating profit margin for the second quarter Q2 at 26.1 per cent.
“We have been able to improve our margins during the quarter and feel confident of sustaining these within a narrow band,” said Rajiv Bansal, Chief Financial Officer. “This is giving us increased confidence to make the investments required to meet our growth aspirations.”
Major verticals such as banking and financial services and insurance contributed around 32.8 per cent of the total revenue followed by manufacturing and retail as well as life science at 23.3 per cent and 23.4 per cent, respectively.
The earnings during the quarter were mainly fuelled by the uptick in demand environment, cost optimisation, coupled with the company’s cost rationalisation measures. “On several fronts, our efforts to bring in operational efficiencies yielded encouraging results during the quarter,” Infosys Chief Operating Officer U. B. Pravin Rao said. “We have seen positive results of some of our interventions on sales, margins and attrition, and we will continue to focus on these areas.”
The financial performance of the company in the second quarter was welcomed by the bourses. On the BSE, the company’s shares closed 6.68 per cent higher at Rs.3,888.95 on Friday.
Commenting on the Infosys results, Mr. Dipen Shah, Head- Private Client Group Research, Kotak Securities, said, “Infosys results were higher than our estimates on the revenues and margins front. The guidance has been maintained, which is along expected lines. The company has improved efficiencies while adding a relatively higher number of employees, which is encouraging. We remain optimistic on the future prospects of Infosys.”