Infosys Q2 net profit up 10.3% to Rs 4,110 cr; sees strong demand outlook

The India's second-largest software services exporter Infosys Tuesday posted a better-than-expected 10.3 per cent net profit growth in the second quarter after margins were boosted by large deal wins and reiterated its revenue forecast for full year.

Net profit in July-September rose to Rs 4,110 crore, or Rs 9.45 per share, from Rs 3,726 crore, or Rs 8.15 a share, a year ago, the company said in a statement. Revenue from operations grew 17.3 per cent to Rs 20,609 crore.

Infosys lifted the number of USD 100 million-plus clients to 23 from 19 in the previous quarter and said it stands by the previously projected 6-8 per cent revenue growth in constant currency terms for the full year ending March 31, 2019.

"We are delighted with our broad-based growth across all business segments and geographies during the quarter. This is a testimony to our strong client relationships, digital led full-service capabilities, and intense focus on the needs of our clients," said chief executive Salil Parekh.

He said there is a strong demand outlook backed by good fundamentals in the US and Continental Europe, so the company has a "fairly comfortable outlook, both in demand and revenue".

"Large deal wins at over USD 2 billion during the quarter demonstrate our increased client relevance and also give us better growth visibility for the near-term," he added.

Infosys said it would comply with the arbitration award that asked it to pay the company's former chief financial officer Rajiv Bansal Rs 12.17 crore and would make the necessary payments.

Bansal had dragged the company to arbitration after payments on his over Rs 17 crore severance, were halted. The firm had filed a counterclaim against Bansal asking for the refund of the previously paid severance of Rs 5.2 crore and other damages.

An arbitration tribunal headed by Justice (retd) R V Raveendran had ruled in favour of Bansal. "The company has received a legal advice and will comply with the award and make the necessary payments," the company said Tuesday.

Revenue from the digital services vertical jumped to 31 per cent during the quarter to USD 905 million. "We will continue to make strategic investments in digital to leverage opportunities and at the at the same time keep sharp focus on key operational efficiency parameters," CFO M D Ranganath said, adding Infosys had seen "blockbuster financial and operational performance" in the just-ended quarter.

The results were announced after market hours. The Infosys shares closed marginally lower at Rs 696.40 a share on BSE, while the broader market was up 0.7 per cent.

Sanjeev Hota, AVP Research at Sharekhan by BNP Paribas, said Infosys had delivered "better than expected numbers on topline and bottomline front for Q2, though margins performance missed the mark".

Infosys has seen a broad-based growth across all business segments and geographies during the quarter with many of the sectors expanding at over 10 per cent year-on-year. In dollar terms, Infosys saw its net profit increase marginally to USD 581 million in September quarter, while revenues at USD 2.92 billion marked a 7.1 per cent year-on-year growth.

The company has declared an interim dividend of Rs 7 per share.

Infosys added 19,721 (gross) and 7,834 (net) people during the September quarter, taking the total headcount to 2,17,739. Attrition (annualised consolidated) was at 22.2 per cent.

"We have had another quarter of solid operating parameters with utilisation being stable and offshore mix improving to an all-time high," said COO U B Pravin Rao. "Our digital services grew double digits sequentially, while growth in top clients was also robust.