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Infosys Q3 Results: Profit Up 9.2%, Revenue Growth Guidance Raised

Infosys has raised its revenue growth guidance for the fiscal ending March 31, even as the outlook for the IT sector worsens.

<div class="paragraphs"><p>The Infosys logo at its campus in Bengaluru. (Photo: Vijay Sartape/BQ Prime)</p></div>
The Infosys logo at its campus in Bengaluru. (Photo: Vijay Sartape/BQ Prime)

Infosys Ltd. has raised its revenue growth guidance for the fiscal ending March 31, shrugging off a grim outlook for the IT sector at large.

Revenue of India's second largest software services firm increased 4.8% sequentially to Rs 38,318 crore in the December quarter, according to an exchange filing on Thursday. That compares with the Rs 37,963-crore consensus estimate of analysts tracked by Bloomberg.

Infosys Q3 Results: Key Highlights (QoQ)

  • Revenue rises 4.8% at Rs 38,318 crore, compared to an estimate of Rs 37,963 crore.

  • EBIT up 4.6% at Rs 8,242 crore, against an estimate of Rs 8,263 crore.

  • EBIT margin at 21.5% compared to 21.55%. Analysts had estimated it at 21.8%.

  • Net profit up 9.2% at Rs 6,586 crore, compared to an estimate of Rs 6,465 crore.

In dollar terms, the company's revenue rose 2.2% sequentially to $4,659 million. It was 2.4% higher in constant currency terms.

The company has guided for 16%-16.5% revenue growth in the fiscal ending March 31, compared to 15%-16% projected at the end of the September quarter, and 14-16% at the end of the June quarter.

The attrition rate eased to 24.3% in the October-December period, as compared to 27.1% in the previous three months. The headcount increased by a net 1,627 to 3,46,845.

"Our revenue growth was strong in the quarter, with both digital business and core services growing. This is a clear reflection of our deep client relevance, industry-leading digital capabilities and unrelenting dedication of our employees," Salil Parekh, chief executive at Infosys, said. "As reflected in the large deals momentum, we continue to gain market share as a trusted transformation and operational partner for our clients."

Infosys' digital services accounted for 62.9% of total revenue, clocking an annual constant-currency growth of 21.7%.

While operational profitability of the Bengaluru-based IT firm remained stable over the previous three-month period, it declined 2% annually.

"Operating margins in Q3 remained resilient due to cost optimisation benefits, which offset the impact of seasonal weakness," Nilanjan Roy, chief financial officer at Infosys, said in the statement. “Attrition reduced meaningfully during the quarter and is expected to decline further in the near-term."

The company has retained its profitability margin at 21-22% for FY23.

Business Performance

According to Infosys' factsheet on its December quarter results, the BFSI segment accounted for the highest share of overall revenue. That was followed by retail, communications, manufacturing and hi-tech.

Geographically speaking, North America brought in more than 60% of Infosys' revenue. Europe accounted for more than a quarter.

As on Dec. 31, Infosys had 1,850 clients, including 134 new deals struck in the third quarter. The top 25 clients contribute more than 35% of the company's overall revenue. The company, at present, has nearly 1,000 million-dollar clients.

The company had a free cash flow of Rs 4,741 crore, as on Dec. 31, compared to Rs 4,752 crore on Sept. 30.

Shares of Infosys, which is in the midst of a buyback, have slipped about 23% from its peak about a year ago, shedding more than $30 billion in market capitalisation.

On Friday, the stock ended 0.62% higher at Rs 1,480.55 apiece.