Infosys net profit dips by 2.2 per cent YoY, but meets street expectation

Bengaluru: IT services company Infosys on Friday said its consolidated net profit has declined by 2.2 per cent at Rs 4,019 crore for the July-September 2019 quarter.

This is against a net profit of Rs 4,110 crore in the same period last fiscal, Infosys said in a regulatory filing.

The city-based company saw its revenue rise by 9.8 per cent to Rs 22,629 crore in the quarter under review from Rs 20,609 crore in the year-ago period.

In constant currency terms, this translates into a 11.4 per cent increase.

Infosys has raised the lower-end of its FY 20 revenue guidance and the revised forecast now stands at 9-10 per cent growth in constant currency terms.

At the beginning of the fiscal, the company had said it expected a revenue growth of 7.5-9.5 per cent for FY 2019-20.

Subsequently, while announcing its first quarter numbers, the company raised its revenue growth guidance for the fiscal to 8.5-10 per cent.

"Our performance was robust on multiple dimensions revenue growth, digital growth, operating margins, operational efficiencies, large deal signings and reduction in attrition," Infosys CEO and MD Salil Parekh said addressing a press conference here.

All these were clear signs that the company was progressing well in its journey of client-centricity and maximising value for its stakeholders, he said.

Speaking about the impact of Brexit and slump in European market, Parekh said, "The view from the macro perspective is that the European market is somewhat slow. We see some impact of Brexit. But we maintained our guidance, which, in fact, we increased the lower end of our guidance.

The company saw a slight decline in revenue from retail segment from 16.8 per cent in the corresponding period last year to 15.2 per cent in this year.

Chief operating officer U B Pravin Rao attributed the decline to macro trade wars and reduced consumption in some of the global markets.

"Obviously the spending retail has come down. We had a fantastic year last year in retail but in the last quarter and this quarter, we are seeing some softness and slow down," Rao said.

He opined that the volatility would probably continue for some time till the macro situation improves.

In dollar terms, net profit was at USD 569 million, while revenue was at USD 3.21 billion in the said quarter.

In the September 2019 quarter, Infosys' digital revenues grew by 38.4 per cent year-on-year to USD 1.23 billion, accounting for 38.3 per cent of its total revenue.

"The digital portfolio again having the good role in Q2, which stood at 38 per cent over all year on year. It really looks robust," Parekh said.

"Many of the deals that we see are large-scale translating in modernisation in which digital is a strong component. So the good news for us is that digital is becoming more and more central in many of the new things that we are doing for our clients," Parekh said.

It has also declared an interim dividend of Rs 8 per share.

Infosys announced its results after the close of trading hours. Its scrip had closed at Rs 815.70 apiece, up 4.19 per cent from the previous close on the BSE.

"We saw expansion in operating margins during the quarter driven by improvement in operational parameters and cost efficiencies. We took the first step towards implementation of our new capital allocation policy by increasing interim dividend by over 14 per cent compared to FY19," Infosys CFO Nilanjan Roy said.

The company completed its share buyback of Rs 8,260 crore on August 26, 2019, wrapping up its additional capital return programme of upto Rs 13,000 crore announced in April 2018.

"Q2 witnessed another quarter of all-round growth in industry segments and geographies which is a testimony to our strong credentials and client relevance. Large deal wins were USD 2.8 billion. We are especially pleased by the reduction in attrition driven by our focus on enhanced employee value proposition," Infosys COO Pravin Rao said.

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