Infosys Q2 net dips 2% YoY to Rs 4,019 cr; ups FY20 guidance to 9-10%

Infosys on Friday posted a 2.2 per cent year-on-year (YoY) fall in the consolidated net profit at Rs 4,019 crore for the quarter ended September 30, 2019. The IT major had recorded profit of Rs 4,110 crore in the year-ago period. Sequentially, the numbers grew 5.8 per cent. The company also revised its FY20 revenue guidance to 9-10 per cent in constant currency terms. 

In constant currency (CC) terms, Infosys posted revenue growth of 11.4 per cent YoY while in US dollar terms, the numbers grew 9.9 per cent. In rupee terms, revenue came in at Rs 22,629 crore, up 9.8 per cent YoY and 3.8 per cent QoQ. Operating profit was Rs 4,912 crore, increase of 0.4 per cent YoY and 9.9 per cent QoQ. Operating margin was 21.7 per cent. Basic earnings per share (EPS) was Rs 9.46, flat YoY and growth of 7.1% QoQ. The company also announced an interim dividend of Rs 8 per share.

Infosys Q2 consolidated

“Q2 witnessed another quarter of all-round growth in industry segments and geographies which is a testimony to our strong credentials and client relevance”, said Pravin Rao, COO. “Large deal wins were $2.8 bn. We are especially pleased by the reduction in attrition driven by our focus on enhanced employee value proposition.”

The company, however, maintained its FY20 operating margin guidance range of 21 per cent-23 per cent. For the quarter ended September 2019, the operating margin came in at 21.7 per cent, up 1.2 per cent on QoQ basis. 

“Our performance was robust on multiple dimensions – revenue growth, digital growth, operating margins, operational efficiencies, large deal signings and reduction in attrition”, said Salil Parekh, CEO and MD. “All these are clear signs that we are progressing well in our journey of client-centricity and maximizing value for our stakeholders.”

Most analysts had predicted Infosys to revise its FY20 revenue guidance upwards given the recent deal momentum, strong positioning in clients and favourable arithmetic (revised guidance implies a 1-2 per cent compounded quarterly growth rate through Q2-Q4FY20). Analysts at Emkay Global had built in 11 per cent year-on-year (YoY) CC revenue growth for FY20, while those at Sharekhan see growth guidance at 9.5-10.5 per cent. Nirmal Bang Securities, on the other hand, had factored in 3.9 per cent QoQ CC growth and nearly 55 basis points (bps) cross-currency headwind, resulting in revenue growth of 3.3 per cent in US dollar terms. In rupee terms, their analysts pegged the net sales at Rs 22,726.3 crore, up 10.3 per cent YoY and 4.2 per cent QoQ.

Infosys Q2 segment-wise

During the three-month period (July-September), Infosys has outperformed the market by surging 10 per cent as compared to 2.67 per cent decline in the Nifty50 index. The Nifty IT index, too, has declined 2.49 per cent during the period, ACE Equity data show.