Infosys reports 6.1% Q2 profit; cuts revenue guidance again

IT major Infosys on Friday posted a 6.1 per cent rise in consolidated net profit at Rs 3,606 crore for the September quarter and slashed its revenue guidance for the second time this year due to its recent performance and ‘near-term uncertain business outlook’.

The Bengaluru-based firm had reported a net profit of Rs 3,398 crore in the year-ago period, it said in a Bombay Stock Exchange filing.

The consolidated revenue for the quarter was up 10.7 per cent at Rs 17,310 crore, from Rs 15,635 crore in July-September 2015. The figures are as per Indian Accounting Standard.

Revenues are now expected to grow 8-9 per cent in constant currency, translating to 9.2-10.2 per cent in rupee terms and 8.2-9.2 per cent in US dollar terms.

This is the second time the company has reduced its revenue guidance for the fiscal. In July, Infosys had said it expected revenues to grow 10.5-12 per cent in constant currency terms, lower than the previously estimated 11.5-13.5 per cent for the full year 2016-17.

“While we continue to navigate an uncertain external environment, we remain focused on executing our strategy and increasing momentum of our software plus services model. Considering our performance in the first half of the year and the near-term uncertain business outlook, we are revising our revenue guidance,” Infosys Chief Executive Officer Vishal Sikka said.

He added that in the long term, it’s increasingly clear that the IT industry’s future lies in evolving from a cost-based, people-only model, to one in which people are amplified by software and artificial intelligence.

The company’s operating margins expanded 80 basis points sequentially to 24.9 per cent.

“Our margins expanded during the quarter on the back of further improvement in operational efficiency. Operating cash flows for the quarter were healthy and we effectively navigated a volatile currency environment through prudent hedging,” Infosys Chief Financial Officer M D Ranganath said.

In US dollar terms, its consolidated net profit rose 3.8 per cent to $539 million (Rs 3,600 crore) in the September quarter of 2016-17, while revenue went up 8.2 per cent to $2.5 billion (Rs 16,750 crore).

Infosys shares were trading at Rs 1,028.20 apiece, down 2.27 per cent from the previous close on the BSE.

The company added 12,717 people (at gross level) and 2,779 employees (net basis) from June quarter, taking its headcount to 1.99 lakh employees as on September 30, 2016. The attrition rate was at 20 per cent for the said quarter.

Liquid assets, including cash and cash equivalents, available-for-sale financial assets and government bonds, were Rs 35,640 crore in the quarter under review compared with Rs 33,212 crore as on June 30, 2016.

Infosys has also declared an interim dividend of Rs 11 per equity share.