Infosys Q3 profit up 23% YoY; Co raises FY20 revenue guidance to 10-10.5%

Earnings per share (EPS) of the company came in at Rs 10.51, an increase of 26.6% YoY and 11.2% QoQ.

Infosys on Friday reported a 23.4 per cent year-on-year (YoY) rise in its net profit at Rs 4,457 crore for the third quarter (October-December period) of the financial year 2019-20 (FY20). The company had logged Rs 3,609 crore profit in the year-ago quarter. Sequentially, the numbers grew 10.89 per cent. 

In rupee terms, revenue for the quarter grew by 7.9 per cent YoY and 9.5 per cent in constant currency (CC) terms. Sequentially, revenues grew by 2 per cent in rupee and 1 per cent in CC.

The company also increased its FY20 revenue guidance to 10-10.5 per cent from 9-10 per cent earlier in constant currency while it maintained FY20 operating margin guidance range of 21 per cent - 23 per cent.  

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“Q3 results further underscore that we remain steadfast in our journey of sustained client relevance and deepening engagement with them, as they partner with us in navigating their next in the digital transformation era”, said Salil Parekh, CEO and MD. “For us, this has translated into double digit growth year-to-date, leading to an increase in revenue guidance, accompanied by expanding operating margins," Parekh added.

Operating profit was Rs 5,064 crore, up 4.8 per cent YoY and 3.1 per cent QoQ while operating margin for the quarter stood at 21.9 per cent, a 20 basis points (bps) improvement QoQ. 

“Overall performance during the quarter was satisfactory on multiple counts – broad-based growth, steady increase in client metrics and healthy large deal wins”, said Pravin Rao, COO. “Large deal wins continue to be robust with growth of 56% so far this year. We had a further reduction in attrition, demonstrating the results of our continued efforts towards strengthening employee engagement and value proposition.”

Earnings per share (EPS) of the company came in at Rs 10.51, an increase of 26.6 per cent YoY and 11.2 per cent QoQ. 

"The results are broadly in line with expectations with the revision in revenue guidance to 10-10.5% constant currency growth for FY20. Outcome of the internal enquiry is encouraging. We expect marginal increase to our FY21/22e earnings of Rs 41.5/46 respectively," wrote analysts at Emkay Global in a post result note.

Given the discount to TCS at around 25 per cent, they expect some narrowing driven by the December 2019 quarter results. Emkay has a HOLD rating on Infosys with a target price of Rs 785.

Revenues by business segments

Revenues by Client Geography

During the quarter, the company signed deals worth $1.8 billion. Attrition (annualized consolidated) during the quarter stood at 19.6 per cent against 21.7 per cent in the previous quarter and 19.9 per cent in the year-ago period.

"Healthy deal wins, digital growth story and upward revision in guidance augurs well. Hence, we remain positive for the company," ICICI Securities said post results announcement. Shares of the company settled nearly 1.5 per cent higher at Rs 738.25 apiece on the BSE.