After Tata Consultancy Services’ upbeat earnings performance, India’s second-largest IT services company Infosys ended the first quarter of the current fiscal on a muted note. Bengaluru-based Infosys on Friday posted a 2.1% quarter-on-quarter fall in net profit during the April-June period, hit by a one-off charge related to fair value reduction of Israeli software company Panaya, which Infosys is trying to dispose of.
Infosys recorded a net profit of Rs 3,612 crore during the June quarter compared to Rs 3,690 crore in the preceding quarter. However, during the same period last year, the company posted a profit of Rs 3,483 crore, up 3.7% year-on-year. “The company has recorded a reduction in the fair value for sale amounting to Rs 270 crore in respect of Panaya. Consequently, profit for the three months ended June 30, 2018, has decreased by Rs 270 crore,” the IT company said in a statement.
Revenue during the quarter stood at Rs 19,128 crore, up 6% year-on-year, and 2.3% quarter-on-quarter in constant currency terms. (IT companies use the constant currency method to eliminate the effects of exchange rate fluctuations while calculating financial results.)
In dollar terms, Infosys recorded a revenue of $2,831 million, up 6.8% year-on-year, and marginally up 0.9% quarter-on-quarter. During the April-June stretch, the profit was recorded at $534 million, down 1.2% year-on-year, and 6.5% quarter-on-quarter (profit during the June quarter had an impact of $39 million on account of reduction in the fair value of Panaya asset held for sale).
“The strong revenue and margin performance in this quarter shows that our dual emphasis on Agile Digital and AI (artificial intelligence) driven core services is resonating with our clients,” said Salil Parekh, CEO and mangaing director of Infosys. “With our Agile Digital business growing sequentially at 8% in constant currency and increase in our large deal wins to over $1 billion, we see good traction in the market.”
During the quarter under review, Infosys’s revenue from digital business grew by 25.6% year-on-year. During the April-June quarter, digital business contributed 28.4% to the IT firm’s overall revenue.
Infosys pointed out that large deal wins crossed $1 billion during the quarter under review, of which over 40% was from the financial services business. The software services exporter maintained its revenue guidance for the fiscal year ending March 2019 at 6% to 8% in constant currency terms, while retaining its operating margin outlook for FY19 at 22-24%.
The company said that the board has also approved the 1:1 bonus issue (one bonus share for every equity share held). Infosys also announced the appointment of Michael Gibbs as an independent director of the company effective July 13, for three years.
The attrition rate on a last 12-month basis (LTM) stood at 20.6% during the June quarter, up from 16.6% in the previous quarter.
Shares of Infosys closed at Rs 1,309.10 a piece, up 1.12% on the Bombay Stock Exchange on Friday, while the Sensex, ended the day marginally down by 0.02%.
