Five takeaways from Infosys results

Meets expectations, costs curtailed but employee attrition continues to rise

The results season has been flagged off by a better than expected set of numbers from Infosys. Against an expected Rs 2,835 crore of net profit, the company posted Rs 2,992 crore, a gain of 4 per cent over previous quarter. Year on year, Infosys’ profit grew by 25 per cent. The stock has reacted positively to the numbers in the initial period of trading. While it is still early days as we await the details from the analyst conference, here are five key takeaways on the numbers as presented by the company.

 

1. While the company has posted a better than expected bottomline number, there has been negative growth on the revenue front sequentially. Rupee revenue fell by 1.15 per cent to Rs 12,875 crore and dollar revenue fell by 0.4 per cent to $2,092 million. Both these numbers are marginally lower than analyst expectations. To their credit, Infosys management has revised the guidance lower last month and these revenue numbers reflect the same.

 

2. Despite lower revenue, profit growth has been possible on account of measures taken to curtail cost. Margins for the March quarter has improved by 46.6 basis points to 25.5 per cent.

 

3. Despite the resignations of senior level executives, work does not seem to be affected. Infosys is able to keep its employees busy which is reflected in the utilisation numbers which are steady at 78 per cent over the previous quarter and has improved from 73.9 per cent in March 2013. However, employees continue to leave the company with attrition rate increasing further to 18.7 per cent as compared to 18.1 per cent in the previous quarter and 16.3 per cent in March 2013. The company has the highest attrition rate among the top players in the sector.

 

4. More than the historic numbers, what is important is the guidance. Infosys’ management has beaten analysts expectation of a 7-9 per cent growth as compared to an expected guidance of 5-6.9 per cent. The company seems to be more bullish about its future than what it portrayed in the recent past.

 

5. Reflecting this bullishness is the higher dividend payout of 40 per cent as compared to 30 per cent of the profit that the company has been giving out. The company has paid a final dividend of Rs 43 per share.