Infosys reports 25% jump in profit, but volumes lag

Infosys reports 25% jump in profit, but volumes lag
IT services giant and India’s second largest software exporter Infosys continued to be staggered by demand deficit in some industry verticals in the key markets of US and Europe during the fourth quarter (Q4) of 2013-14 ending March 31, but kept its net profit figures steady with some big client wins and uptick in client spending. 

The Bangalore-based IT bellwether which has been recovering from stagnant operating margins for the better part of last year, on Friday posted 25 per cent jump in consolidated net profit after tax to Rs 2,992 crore for the quarter ended March 31, 2014 compared to Rs 2,394 crore in the same quarter of the previous fiscal.
 
On a quarter-on-quarter (QoQ) basis, the bottomline rose 4.1 per cent from Rs 2,875 crore in the third quarter ended December 31, 2013.
 
Revenues during the quarter rose 23.2 per cent to Rs 12,875 crore from Rs 10,454 crore year-on-year, but was down 1.2 per cent QoQ from Rs 13,026 crore during the third quarter. 
 
Volumes grew just 0.4 per cent QoQ, though operating margins rose 46 basis points to 25.5 per cent thanks to more staff offshoring and operational efficiency. 
 
Infosys CEO and Managing Director S D Shibulal said, “Our annual revenue run rate crossed Rs 50,000 crore for the first time and our current cash flow is around Rs 13,000 crore.

Overall discretionary spends, however, are still under pressure though our number of million dollar clients rose from 448 to 501 during the year.

Revenue realisation takes time. We are trying to win more and more transformational deals. Products and platforms is a completely new space for us.

We are looking to grow more in the operations space where a bulk of our revenues are dependent.” 
 
There was some shortage of onsite staff during 2013 because the company had not applied for enough visas in 2012. ”This had an impact on our revenues,” he said.

The company placed its dollar revenue forecast in the 7-9 per cent range for 2014-15, well below Nasscom's projection of 13-15 per cent. CFO Rajiv Bansal said, “This quarter's margins saw a 50 bps fall.
 
In fiscal 2013, we had started with higher margins. This year we have done ok. However, next year (2013-14), we will be looking to bridge the gap between the industry growth rate and our growth rate.” 
 
On the typically cautious rupee and dollar guidance, Shibulal said, "All factors have been factored into the guidance and our guidance is the statement of fact... we know the momentum of Q3 and Q4, we know the Q4 numbers, we know the pipeline is marginally better..... we have factored all these.”
 
The company will pay out upto 40 per cent of its PAT as dividend. Shibulal termed top-level exits at Infosys as nothing abnormal.

He added that he does not expect any visa-specific scrutiny looming ahead for the company. “Last year, we got a fairly good percentage of visas. We expect the same this year.”
 
Infosys and subsidiaries added 50 clients during the fourth quarter and 238 during the year.

There was a gross addition of 10,997 employees during the quarter and 39,985 during the year.
 
The company had 160,405 employees on its rolls at the end of March 31, 2014.

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