IT major Infosys Friday posted a 10.5 per cent rise in consolidated net profit at ₹4,078 crore for the March 2019 quarter, and guided towards 7.5-9.5 per cent growth in revenue for FY 2019-20.
Infosys – whose earnings announcement coincided for the first time with that of larger rival Tata Consultancy Services (TCS) – saw its revenues increase 19.1 per cent to ₹21,539 crore in the March 2019 quarter from ₹ 18,083 crore in the year-ago period.
The country’s second-largest software services firm said it expects its top-line to grow 7.5-9.5 per cent in FY 2019-20 in constant currency terms.
In October, Infosys had raised its revenue growth outlook for FY19 to 8.5-9 per cent from 6-8 per cent (given at the beginning of the fiscal).
‘Strong acceleration’
“Looking at what we have done in terms of the full year in new wins but also making sure that we look at what is going on in the market… we have a very strong acceleration in the full year. And therefore, guidance if you recall for fiscal 2019 was 6-8 per cent and now, we have bumped it up to 7.5 to 9.5 per cent,” Infosys CEO and Managing Director Salil Parekh told reporters.
He added that from the company’s perspective, this is ‘a very strong movement on the guidance in the growth direction.’
TCS figures
While TCS does not offer revenue forecast, the Mumbai-based firm has exuded confidence that its deal pipeline is robust and that it is positioned strongly for the new fiscal.
TCS reported 17.7 per cent jump in net profit at ₹8,126 crore for the March 2019 quarter, while revenue was higher by 18.5 per cent to ₹38,010 crore from the year-ago period.
According to TCS CEO Rajesh Gopinathan, this is the ‘strongest revenue growth’ that the company has posted in the last fifteen quarters.
For the full financial year, Infosys net profit declined by 3.9 per cent to ₹15,410 crore, while revenue increased 17.2 per cent to ₹ 82,675 crore.
“Our planned investments have started yielding benefits. As we look ahead into fiscal 2020, we plan to deploy various measures of operational efficiencies across the business,” Parekh said in a statement.
He termed the results as strong on multiple fronts, including revenue growth, performance of digital portfolio, large deals and client metrics.
In the fourth quarter, Infosys digital revenues were at $1.03 billion (33.8 per cent of total revenues) — registering year-on-year growth of 41.1 per cent.
Infosys expects its operating margin in FY20 to be in the range of 21-23 per cent. Margins for FY19 stood at 22.8 per cent.
Dividend
For the financial year 2019, the company’s board has recommended a final dividend of ₹ 10.50 per share. After including the interim dividend of ₹7, the total dividend for the fiscal will amount to ₹17.50 per share.
Sanjeev Hota, AVP Research at Sharekhan by BNP Paribas, said Infosys had delivered mixed set of earning performance but its revenue guidance is a tad ‘conservative.’
“Deal wins remain strong and management has guided for 7.5-9.5 per cent revenues growth for FY20E (estimate), which we believe is bit conservative. Nevertheless, company delivered strong growth on digital revenues front. On the flip side, management has lowered the margins guidance to 21-23 per cent, which was below our expectations and also attrition inched up during the quarter,” he said.
In US dollar terms, Infosys saw its net profit growing 1.7 per cent to USD 581 million in the March 2019 quarter from USD 571 million in the year-ago period, while revenues rose 9.1 per cent to USD 3.06 billion from USD 2.8 billion a year ago.
For 2018-19, net profit declined 11.5 per cent to USD 2.2 billion, while revenues grew 7.9 per cent to USD 11.7 billion.
“We had another quarter of over USD 1.5 billion large deal total contract value (TCV) in Q4, as a result of which FY19 TCV doubled over FY18. Realisation per billed employee was steady which reflects increasing usage of automation in core services and faster growth in newer digital services,” Infosys COO Pravin Rao said.
Infosys added 2,622 people (net) during the March 2019 quarter, taking its total headcount to over 2.28 lakh. Its annualised consolidated attrition was at 20.4 per cent in the just-concluded quarter, from 19.4 per cent in the same period last year.
Commenting on attrition, Rao said it is definitely higher than what the company had anticipated.
However, the company has started multiple interventions in the last quarter, Rao said, adding, “We have come up with a new employee value proposition, providing them better opportunities and offering them a very rewarding experience.”
Asked if the macroeconomic environment affected the margins, Parekh said there are some areas, for instance the manufacturing sector in Europe, which is showing weakness but it is not across the whole business.
Overall, he said the company feels robustness in its business which has been reflected in its guidance.
Providing an update on its ₹8,260-crore buyback offer initiated in March, the company said it has bought back shares worth ₹1,546 crore so far.
The results were announced after market hours. The shares of Infosys closed marginally higher at ₹747.85 apiece on BSE Friday.