India’s second-largest software exporter Infosys’ net profit rose 10.3% year-on-year to ₹4,110 crore for the second quarter ended September as financial services and retail sectors buoyed up revenue and the Bengaluru-based firm posted bigger client wins.
“We are delighted with our broad-based growth across all business segments and geographies during the quarter,” said Salil Parekh, CEO and managing director. “This is a testimony to our strong client relationships, digital led full-service capabilities, and intense focus on the needs of our clients.”
“Large deal wins at over $2 billion during the quarter demonstrate our increased client relevance and also give us better growth visibility for the near-term,” he said.
Last week, Tata Consultancy Services, the country’s biggest software exporter, had reported a 22.57% rise in net profit at ₹7,901 crore. Revenue for the quarter increased from ₹30,541 crore to ₹36,854 crore.
Infosys’s digital revenues stood at $905 million accounting for 31% of total revenues of ₹18,297 crore.
Revenue from the financial sector grew by 14.2% to ₹6,644 crore while retail rose 23.7% to ₹3,469 crore.
Retains revenue outlook
Revenue guidance in constant currency for the full year was retained at between 6% and 8% and operating margin guidance was also maintained at between 22% and 24%.
“There are a lot of positives in this,” said Apurva Prasad, an analyst at HDFC Securities.”They have not changed the guidance and at the same time rupee depreciation gains have been balanced out by variable pay and investments.”
Utilisation rates have been stable and offshore mix had improved to an all-time high”, said U.B. Pravin Rao, chief operating officer. “Our digital services grew double digits sequentially, while growth in top clients was also robust.”
There has been strong demand from North American and European clients in the financial and retail sectors, he said. “The highest comes from retail.”
M.D. Ranganath, chief financial officer, said: “Operating margins for the quarter as well as for the half year was at 23.7%, near the top end of our guidance band. We had a laser sharp focus on efficiency. Currency did benefit and at the same time we had comprehensive investments.”
Strategic investments
“Operating cash flow was over $1 billion during the first half of the year and ROE was at 24.7%. We will continue to make strategic investments in digital to leverage opportunities and at the same time keep a sharp focus on key operational efficiency parameters,” said Mr. Ranganath, who stepped down as the CFO, in August.
He was the second CFO to resign in the last three years and Infosys announced that Mr. Ranganath would continue in his current role till November 16, 2018.
In October 2015, former CFO Rajiv Bansal, who opposed an acquisition of an Israeli firm, resigned after differences with the then management team.
On September 17, 2018, an Arbitral Tribunal had communicated a decision to pay Mr. Bansal an outstanding amount of ₹12.17 crore “with regard to the dispute between Infosys Ltd. and its former CFO Mr. Rajiv Bansal.”
Infosys has received legal advice and will comply with the award and make the necessary payments.
“We decided to make the payment and proceed ahead,” Mr. Parekh said.
The attrition rate of the company stood at 22.2% in the second quarter compared with 21.4% a year earlier.
Infosys also declared an interim dividend of ₹7 per share which is to be paid by October 30.
