Infosys clocks 21.4% net jump, raises revenue outlook

The urge to keep operating costs on a tight leash and a determination to go in for big ticket contracts in the US and Europe during the third quarter ended December 31, 2013 helped Infosys Ltd post 21.4 per cent jump in net profit after tax to Rs 2,875 crore compared to Rs 2,369 crore a year ago.

Third quarter revenues of India’s second largest IT firm rose 25 per cent to Rs 13,026 crore from Rs 10,424 crore in the corresponding period a year earlier. 

Operating margins were ahead of analyst expectations with EBIT (Earnings Before Income Tax) margins expanding 145 basis points on a quarter-on-quarter basis to 25 per cent. However, volume growth was muted at 0.7 per cent in the third quarter in comparison with the previous quarter ended September 30.

A visibly elated Executive Chairman N R Narayana Murthy owed the satisfactory results to team work, and the Bangalore-based company’s growing stream of young leaders.

Infosys raised its revenue growth forecast to 24.4-24.9 per cent for fiscal 2014, from 21-22 per cent estimated earlier.

The company is looking to reach the target with the help of organisational changes announced earlier this month by CEO & MD S D Shibulal. Shibulal had stated that two posts of presidents had been created with U B Pravin Rao and B G Srinivas at the helm who would report to him.

Shibulal asserted that the purpose behind the realignment is to create industry leadership fronts, focus on deepening relationships with clients, expand market share and improve the pace of innovation and agility. There were promotions and cut down in attrition rate during the quarter, Shibulal said in response to a query.

"We are seeing some confidence coming back to our clients but at the same time we expect the budget to be stable from last year to this year. Our clients are very focused on cost optimisation even today," Shibulal said, adding that the company has realigned its business portfolio to further enhance its client relationship focus and increase market share.

Operations for the Americas and Europe will now be organised by seven industry segments and each will be led by a segment head.

As the market expected, the company revised its dollar revenue guidance for 2013-14 to 11.5-12 per cent from 9-10 per cent given earlier, implying dollar revenue growth of 1.4 per cent quarter-on-quarter for the fourth quarter ending March 31, 2014.

The management indicated that the deal pipeline is better than what it was the same time last year, even as the company remains focused on growth.