No change in Infosys guidance; net up in Q1

Indian IT bellwether Infosys Ltd has maintained its revenue guidance at 7-9 percent in dollar terms for fiscal 2014-15 as there is no change in its business environment.

"We have retained the annual guidance at 7-9 percent in dollar terms for this fiscal, as there has been no change in our business environment during the quarter," outgoing Infosys chief executive S.D. Shibulal told IANS here Friday.

In rupee terms, the consolidated revenue is expected to grow 5.6-7.6 percent year-on-year (YoY) in rupee terms.

The demand environment, however, remained stable, as evident from five large multi-year deals the company closed in first quarter (April-June) of this fiscal (2014-15), with a combined value of $700 million and added 61 clients in the quarter under review (Q1).

"We see positive trends in our large deal wins during the quarter. We believe that this momentum will hold us in good stead as we focus on increasing volumes," chief operating officer U.B. Pravin Rao said in a statement here later.

The company, earlier in the day, reported net profit of Rs.2,866 crore for the first quarter, registering 21.6 percent year-on-year (YoY) and 3.5 percent sequential growth.

In a regulatory filing to the Bombay Stock Exchange (BSE), the company said its consolidated income for the quarter increased 13.3 percent YoY and 0.8 percent sequentially to Rs.12,770 crore.

Under the International Financial Reporting Standard (IFRS), net income rose 15.3 percent YoY and one percent sequentially to $482 million and gross revenue 7.1 percent YoY and two percent sequentially to $2.13 billion.

The company has discontinued giving quarterly guidance since a year.

"We continue to enjoy the confidence of our clients by demonstrating superior execution capability and value realization. As I give the chief executive mantle to Vishal (Sikka), I am confident that he will leverage this strong foundation to take the company to great heights," Shibulal said on the occasion.

Operating margin improved to 25.1 percent from 23.5 percent year ago, as the company's utilisation rate increased to 80.01 percent from 76.7 percent quarter ago and 74.3 percent year ago despite impact of wage hike and rupee appreciation.

"We improved operational performance as a result of our cost optimisation initiatives and a focus on increasing productivity and utilisation, which partially offset the impact of compensation increases for our employees in the quarter," chief financial officer Rajiv Bansal said.

The operating margin also improved due to 1.1 percent gain from change in the Companies Act on the depreciation of fixed assets.

The company's huge cash reserves, however, declined to Rs.29,748 crore sequentially from Rs.30,251 crore.

Though the company and its subsidiaries added 11,506 people during the quarter under review, net addition was only 879, as 10,627 techies left, increasing the attrition rate to 19.5 percent YoY from 16.9 percent year ago and 18.7 percent quarter ago.

"Our attrition rate is a matter of concern as it remained high though it also reflects the high demand environment for our workforce," Shibulal observed.

With 879 new techies joining, the company's total number of employees has gone up to 161,284 from 160,405 quarter ago and 157,263 quarter ago.

"We are coming out of a tough environment where we faced multiple challenges externally and internally during the last three years," Shibulal said.

The company will continue to hire this fiscal in commensurate with its business growth and projects being executed offsite and onsite.

"We are also hiring locally in the countries we have our software development centres and clients are based. About 300 graduates from top business schools are joining us this fiscal in sales, development, consulting and back office operations," Shibulal added.