Infosys Q4 net up 3.5%; revenue guidance below industry average

IT services major Infosys today reported 3.5 per cent growth in consolidated net profit to Rs 3,097 crore (Rs 30.97 billion) for the quarter ended March 31.

It had posted net profit of Rs 2,992 crore (Rs 29.92 billion) in the January -March quarter of the 2013-14 fiscal, Infosys said in a BSE filing.

Revenue of the country's second largest IT services firm rose by 4.2 per cent to Rs 13,411 crore (Rs 134.11 billion) in fourth of the last fiscal compared to Rs 12,875 crore (Rs 128.75 billion) in the same quarter of 2013-14, it added.

On a sequential basis, Infosys' net profit fell 4.7 per cent from Rs 3,250 crore (Rs 32.50 billion) in October-December quarter, while revenue declined by 2.8 per cent from Rs 13,796 crore (Rs 137.96 billion) during the same period.

Reacting to the results, the company scrip fell 4.76 per cent to Rs 2,021.50 apiece on the BSE.

Infosys Managing Director and CEO Vishal Sikka said: "We see the industry going through a fundamental and structural transition."

"Despite being a challenging quarter, I am encouraged by the early successes in executing our Renew-New strategy, on a foundation of learning."

In US dollars, Infosys net profit grew 2.3 per cent to $498 million in the fourth quarter of 2014-15 from $487 million in the year-ago period; revenues rose 3.2 per cent to $2.159 billion from $2.092 billion a year ago.

Quarter-on-quarter, net profit fell 4.6 per cent from $522 million in December quarter, whereas revenue declined 2.6 per cent from $2.218 billion during the same period. Infosys said it expects revenue for 2015-16 fiscal to grow in the range of 10-12 per cent, which is below Nasscom's estimate of 12-14 per cent.

Infosys announced that it will acquire digital commerce player Kallidus Inc and its affiliate, for $120 million (about Rs 763 crore), which includes a deferred component and retention bonus.

The software services exporter is also making an early stage investment of USD 2 million in Airviz (around Rs 13 crore), to acquire a minority share.

That apart, it said the Board of Directors has "approved the transfer of the business of Finacle and EdgeServices to the company's subsidiary -- EdgeVerve Systems Ltd". Cash and cash equivalents, available-for-sale financial assets, certificates of deposits and government bonds were Rs 32,585 crore (Rs 325.85 billion) as on March 31, 2015.

"Services growth in the fourth quarter was lower than we expected, though we saw healthy growth in Finacle and our Edge suite," Infosys COO U B Pravin Rao said. Pricing continues to be under pressure due to increasing commoditisation in traditional outsourcing business, requiring the firm to ramp up productivity through automation, and enhance our differentiation in large engagements, he added.

Infosys CFO Rajiv Bansal said: "We were able to improve profitability during the year even as we made investments into our employees and other strategic areas. We have been able to achieve this because of increased operating efficiencies despite a difficult pricing environment." Infosys said its quarterly annualised attrition rate has declined to 13.4 per cent in the January-March quarter.

"Our focused employee engagement initiatives over the last few months have resulted in containing employee attrition to one of the lowest in recent times.

And our investments in innovation and in renewing our capabilities are helping to elevate our client relationships," Sikka said.

On outlook, Infosys said: "Revenues are expected to grow 10-12 per cent in constant currency terms. Revenues are expected to grow 6.2-8.2 in dollar terms."

For the period ended March 31, 2015, Infosys's total headcount stood 1,76,187, as against 1,60,405 a year-ago.

Net additions for year ended March 31, 2015 were 15,782. Infosys Board recommended a dividend of Rs 29.50 per share for fiscal 2015.

The Infosys spent Rs 254 crore in 2014-15 towards Corporate Social Responsibility (CSR) primarily being carried out through the Infosys Foundation, its philanthropic arm.