Infy surprises mkts with results; net grows 5% in Q1

In a quarter marred with stress on the margins of the IT services firms, Bengaluru-based IT major ringed off a surprise by pulling off a 5% growth in its bottom line.

The company has clocked net profit of Rs 3,802 crore for the quarter ended June 30, 2019, up 5% as compared with Rs 3,612 crore for the corresponding quarter last year.

However, on a sequential basis, the company saw its net profit dip by 6.8% from Rs 4,078 crore for the fourth quarter ended March 31, 2019.

The brokerages had predicted a double-digit decline – ranging between 11% and 16% -- in the net profits of the IT major.

The revenues of the company showed a healthy double-digit growth jumped by 14% to Rs 21,803 crore, from Rs 19,128 crore.

The gross profit of the company increased to Rs 7,024 crore, as against Rs 6,840 crore in the corresponding quarter last year. During the day's trade, the company's scrips went up by Rs 6.26 per share at BSE, to close at Rs 727.10 per share.

The company also saw its digital revenues cross historic $1 billion on a quarterly basis for the second consecutive quarter. The company clocked digital revenues worth $1.19 billion – 35.7% of the company’s total revenues.

The woes on the company, however, on the operating margin front continued in the quarter. The company’s operating margins declined by 100 basis points to 20.5% for the June quarter – lowest in many quarters.

On the geographical front, North America grew by 3.8% has been the biggest contributor to the company’s revenues in the quarter, followed by Europe 1.7%, and India revenues declined by 7.9%.

The company also signed the deals worth $1.57 billion, taking the annual tally to record $6.28 billion.

Hopeful of increased revenues, despite global macros being on the slower side, the company has upped its guidance. The company increased FY 2020 revenue growth guidance range to 8.5%-10% in constant currency from existing 7.5%-9.5%. On the other hand, the company maintained its operating margin guidance range of 21%-23%.

“We had a strong start to FY 20 with constant currency growth accelerating to 12.4% on year over year basis and digital revenue growth of 41.9%. This was achieved through our consistent client focus and investments which have strengthened our client relationships”, said Salil Parekh, CEO and MD.

On the human resources front, the company saw its attrition skyrocket to 23.4%, up 300 basis points on a sequential basis.

“A big part of our attrition at the lower level and in the current compensation review exercise we are trying to address it. We expect over a period of time the attrition will come down to a manageable level...But So far, we have not seen any impact of this attrition in terms of our deliverables and have been able to deliver in some sense sometimes it is also reflected in the growth rates,” said Pravin Rao, chief operating officer.