Software giant Infosys’ revenue outlook up despite flat growth in first quarter | business-news | Hindustan Times
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Software giant Infosys’ revenue outlook up despite flat growth in first quarter

The outsourcing firm posted consolidated revenue of Rs 68,484 crore for fiscal 2016-17.

business Updated: Jul 14, 2017 20:47 IST
The logo of Infosys is pictured inside the company's headquarters in Bengaluru.
The logo of Infosys is pictured inside the company's headquarters in Bengaluru.(Reuters File Photo)

Beating street estimates, global software major Infosys Ltd on Friday gave a marginally higher revenue outlook in dollar and rupee value for fiscal 2017-18, despite flat and subdued growth in the first quarter (April-June).

“Consolidated revenue for this fiscal (FY 2018) will grow 7.1-9.1% year-on-year (YoY) in dollars and 3-5% in rupees while it would be 6.5-8.5% in constant currency,” the IT major said in a statement here.

The outsourcing firm posted consolidated revenue of $10.2 billion (Rs 68,484 crore) for fiscal 2016-17.

In constant currency, the US dollar was Rs 64.58 as on June 30, as against Rs 67.53 a year ago and Rs 64.85 on March 31, 2017.

The outlook for the fiscal, revised from 6.1-8.1% in dollar and 2.5-4.5% in rupee projected in April, surprised the market, as revenue for the April-June quarter (Q1) was flat (1.8%) YoY at Rs 17,078 crore as against Rs 16,782 crore in the same period year ago and subdued (0.2%) sequentially from Rs 17,120 crore quarter ago in rupee value.

Under the International Financial Reporting Standard (IFRS) too, revenue for the quarter under review (Q1), however, was up six per cent YoY to $2,651 million from $2,501 million and 3.2% up sequentially from $2,569 million quarter ago in dollar value.

Of the total revenue, exports accounted for 96.4%, including 61.1% from North America, 22.4% Europe, 12.9% rest of the world and 3.6% India.

Revenue from repeat business was 99.4% in Q1 as against 96.2% quarter ago and 98.8% year ago.

In a regulatory filing on the BSE earlier in the day, the outsourcing firm reported Rs 3,483-crore consolidated net profit for Q1, registering 1.4% YoY flat growth from Rs 3,436 crore in the like period year ago but 3.3% lower sequentially from Rs 3,603 crore quarter ago in rupees.

Under the IFRS, Q1 net income was up 5.8% YoY to $541 million from $511 million year ago and flat (0.4%) sequentially from $543 million quarter ago in dollar terms.

“Our focus on execution in Q1 is reflected in broad-based performance on multiple fronts -- revenue growth, resilient margins despite multiple headwinds, healthy cash generation and overall results,” Infosys Chief Executive Vishal Sikka told reporters.

Buoyed by the growth in revenue per employee for six quarters on trot, Sikka said the strong momentum in new high growth services would enable the company to focus more on innovation.

“The adoption of our innovation and education initiatives continue to fuel our transformation to becoming a next-generation services company,” said Sikka.

Operating margin at 24.1% was flat or same as year ago.

Operating cash flow was Rs 4,151 crore ($644 million) in Q1, as against Rs 3,625 crore ($547 million) in the fourth quarter (Q4) of last fiscal (2016-17).

Chief Financial Officer M.D. Ranganath said the company had navigated the quarter despite currency volatility through hedging.

“Our focus on strong cash generation led to a healthy operating cash flow. Emphasis on operational efficiencies also enabled us to mitigate the impact of margin headwinds during the quarter,” said Ranganath.

Cash and investments were Rs 39,335 crore ($6,091 million) on June 30, as against Rs 38,773 crore ($5,979 million) on March 31.

Addition of 59 clients during the quarter was less than 71 a quarter ago and 95 a year ago.

Of the new clients, six were signed for $25 million billing, one for $10 million billion and eight for $1 million. It lost one client in $100-million band and three in $5 million band.

Reflecting the sluggish business growth in the global IT industry, the company had 1,164 active clients at the end of Q1 as against 1,162 quarter ago and 1,126 a year ago.

Chief Operating Officer U.B. Pravin Rao said new services and software offerings were helping the company to strengthen its positioning in the market.

“We had broad-based growth across geographical and industry segments. Our initiatives on operational discipline led to record levels of utilization and better realization during the quarter,” said Rao.

Though the company’s blue chip scrip of Rs 5 face value gained Rs 6.30 to trade at Rs 982.60 in the post-noon session on the BSE, it lost Rs 4.25 later to end at Rs 972.05 as against Thursday’s closing price of 976.30 after opening at a high of Rs 1,000 and going up to Rs 1,006.65 in the pre-noon session.