Infosys profit rises 1.3% in June quarter

Business Saturday 15/July/2017 13:13 PM
By: Times News Service
Infosys profit rises 1.3% in June quarter

Bengaluru: India's second-biggest software services firm Infosys on Friday posted better-than-expected 1.3 per cent increase in net profit for the June quarter, helped by client wins in key markets, and raised its annual US dollar revenue outlook.
The company, which registered net profit of Rs3,483 crore (Rs34.83 billion) in April-June 2017, said it would continue with its pace of hiring in India, even as it steps up recruitment in its largest market — the US.
The Bengaluru-headquartered company also raised its US dollar revenue growth guidance for the fiscal to 7.1-9.1 per cent, from the previously projected 6.1-8.1 per cent. However, it maintained its constant currency revenue outlook at 6.5-8.5 per cent.
Revenue grew 1.7 per cent to Rs17,078 crore (Rs170.78 billion) in the first quarter of 2017-18 as against Rs16,782 crore (Rs167.82 billion) in the year-ago period.
"Our persistent focus on execution in Q1 is reflected in broad-based performance on multiple fronts — revenue growth, resilient margins despite multiple headwinds, healthy cash generation and overall business results," Infosys CEO Vishal Sikka told reporters here.
Infosys' numbers are better than that announced by Tata Consultancy Services (TCS) on Thursday. The larger rival posted a muted set of numbers, hit by currency fluctuations and wage hikes. It saw a 5.9 per cent fall in net profit to Rs5,945 crore (Rs59.45 billion) in June quarter from the year-ago period.
However, shares of Infosys erased early gains and ended 0.5 per cent lower at INR 972.05 apiece on the BSE on Friday.
On a sequential basis, Infosys' net profit declined 3.3 per cent while revenues were down 0.2 per cent in rupee terms.
Sarabjit Kour Nangra, VP Research, IT at Angel Broking, said Infosys' performance was mainly driven by better-than-expected volume growth during the quarter.
"Impact of wage hikes and visa expenses, apart from rupee appreciation were the major drag for profitability. However, the fall was lower than expected on back of better than expected volume growth," Nangra added.
Wipro, the country's third largest IT services player, will announce its results on July 20.
Infosys, which has been battered by a series of events including a spat between its board and high-profile founders led by former chairman N R Narayana Murthy over corporate governance, added eight clients in the $100 million-plus category during the first quarter.
Infosys has committed to adding 10,000 jobs in the US in the next few years, but remains bullish on its recruitment plans in India as well.
"There is absolutely no slowdown in hiring in India. We have talked about 10,000 hiring in the US in two years, we do 10,000 hiring in India in less than two quarters," Sikka said.
Infosys had 1,98,553 employees at the end of June quarter. This is, however, lower by 1,811 people compared to the March quarter.
India's $150-billion IT industry is facing headwinds in its biggest market, the US, where clients are holding back spending and the Donald Trump administration is tightening rules on H-1B skilled worker visas, of which Infosys leads in usage among peers.
In US dollar terms, Infosys' net profit grew 5.8 per cent to $541 million in the June quarter while revenues rose 6 per cent to $2.65 billion from the year-ago period.
Sikka, who arrived for the media briefing at the company's headquarters in an autonomous driverless vehicle built by Infosys engineers, said he was encouraged by the uptick in revenue per employee for six quarters in a row.
He was also enthused by the strong momentum in new high growth services and software and said these contributed over 8 per cent of the revenues.
Liquid assets including cash and cash equivalents and investments were at Rs39,335 crore (Rs393.35 billion) as of June 30, 2017.
"We successfully navigated yet another quarter of significant currency volatility through our hedging," Infosys CFO M D Ranganath said.
Ranganath, who is now being re-located to the US, said the firm is awaiting certain approvals for its up to Rs13,000 crore (Rs130 billion) capital allocation programme and hopes to execute its plans "as soon as possible".
During the June quarter, Infosys has also written down its entire carrying value of the investment in its associate DWA Nova LLC, an Infosys Innovation Fund Investment.
"The impact of write down on Q1 18 net profit is $11 million," it added.