Infosys Q2 Results: Revenue Meets Estimates, Raises Guidance At Lower End
The software services exporter’s revenue increased 6% sequentially to Rs 36,538 crore in the quarter ended September.
Infosys Ltd.’s revenue rose in the second quarter, aided by deal wins, even as fears of a slowdown in budget for digital spending persist. The company also raised its full-fiscal revenue growth guidance at the lower end of the band.
The software services exporter’s revenue increased 6% sequentially to Rs 36,538 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 36,470.1-crore consensus estimates of analysts tracked by Bloomberg.
Infosys Highlights Q2 FY23 (QoQ)
Revenue in U.S. dollar terms rose 2.5% to $4,555 million.
Revenue growth in constant currency terms stood at 4%.
Net profit rose 12% to Rs 6,021 crore, against the Rs 5,916.3-crore forecast.
Operating profit rose 14% to Rs 7,873 crore.
EBIT margin stood at 21.5% compared with 20% in Q1.
The company raised the guidance for FY23 revenue to 15-16% from 14-16% projected at the end of the first quarter. Its expects operating margin at 21%-22% against 21-23% estimated earlier.
"Guidance is narrowed due to caution in mortgages, financial services, high tech, telecom and retail keeping in mind all positive and global macro-economic factors, guidance narrowed at higher end of the band from 14-16% to 15-16%," Salil Parekh, chief operating officer, said.
The software services company has approved a proposal to buy back equity shares worth Rs 9,300 crore. It will repurchase 5,02,70,270 equity shares, representing 1.19% of the total paid-up share capital, according to an exchange filing.
Business Environment
Infosys won deals worth $2.7 billion in the July to September quarter, compared with $1.7 billion in the previous quarter.
The IT company saw and margin expansion of 150 basis points of which 70 basis points due to currency benefits, chief financial officer Nilanjan Roy said.
Parekh underscored that the company has large deal pipeline and the company is witnessing strong growth in the quarter ending September in the U.S. and Europe as well.
"We continue to see pipeline in both geographies but we are watchful given the macro environment development," he added.
Voluntary attrition on last 12 month basis dipped to 27.1% at the end of September compared to 28.4% in June.
The company made net employee additions of 10,000 in the second quarter compared to 10,000 additions in the first quarter.
"There's more caution in the way the clients are looking at services. We see caution on discretionary spends here and there," Parekh said.
He added that the company doesn't support dual employment. "We have let go of employees in the past where they were working for two companies and there were confidentiality issues."
Segment-Wise Revenue
All the key business segments of Infosys, including BFSI, saw growth over the preceding quarter. Manufacturing saw the biggest jump in revenue, followed by retail.
Shares of Infosys closed 0.47% lower before the results were announced, compared with a 0.64% loss in the benchmark Nifty 50.