Global uncertainty stalls Infosys growth story
Global economic uncertainty continues to haunt the Indian IT industry as evident from the marginal (5%) revenue growth year-on-year (YoY) its bellwether Infosys Ltd has retained for 2012-13 fiscal in dollar terms.business Updated: Oct 12, 2012 13:00 IST
Global economic uncertainty continues to haunt the Indian IT industry as evident from the marginal (5%) revenue growth year-on-year (YoY) its bellwether Infosys Ltd has retained for 2012-13 fiscal in dollar terms.
"Global economic uncertainties continue to face the industry. Our revenue outlook ($7.3 billion) remains the same as projected earlier (in July) in dollar terms," said Infosys chief executive SD Shibulal in a statement on Friday.
For the second time in succession, the global software major has not given revenue guidance for third quarter (Oct-Dec) of the fiscal under review (FY 2013), as repeat business from existing clients was 98% in second quarter (July-Sep) as against 99% in first quarter (April-June) and same a year ago.
Even in rupee terms, revenue guidance has been lowered 1.9% to Rs. 39,582 crore (Rs.396 billion) from Rs. 40,364 crore (Rs. 404 billion) the company gave in July, projecting 17.3% YoY growth as against 19.7% YoY earlier.
"We are focused on high quality growth despite global currency and economic volatility," chief financial officer V Balakrishnan said after the company released its financial results for second quarter (Q2).
Currency volatility, however, strengthened the rupee to Rs. 53 per dollar from Rs. 55 during the quarter under review (Q2).
Earlier, the company reported net profit of Rs. 2,369 crore (Rs. 23.69 billion) for second quarter, posting 24% YoY growth and 3.5% quarter-on-quarter (sequentially) in rupee terms.
Similarly, consolidated revenue grew 21.7% YoY to Rs. 9,858 crore (Rs. 98.58 billion) and 2.5% sequentially from first quarter (April-June) of this fiscal.
Under the International Financial Reporting Standards (IFRS), net income is up 4.9% YoY to $431 million and revenue 2.9% up YoY to $1.80 billion. Sequentially net income grew 3.6% and revenue by 2.6%.
Operating margin, however, declined 3.6% sequentially to 26.6% from 29.9% in previous/first quarter and 1.6% lower from 28.2% a year ago.
To retain its bright talent, especially laterals, with five years and above experience, the company has given 6-8% wage increase to its offshore techies and two% to its onsite employees.
"We have increased employee wages, used some of our cash (reserves) in a transformational acquisition of a consulting business (Zurich-based Lodestone Holding for $349 million/Rs. 1,932 crore) and enhanced our investment in R&D (research and development) and solutions," Shibulal pointed out.
Though the company hired 10,420 techies during the quarter, net addition was 2,610 as 7,810 employees left the company, resulting in 15% attrition as against 14.9% in previous quarter and 15.6% year ago.
Total employees of the company, including its overseas subsidiaries increased to 153,761 by Sep 30 from 151,151 on June 30 and 141,822 a year ago (Sep 30, 2011).
The company and its subsidiaries also added 39 clients during the quarter (Q2), taking the total to 715 from 711 quarter ago and 647 year ago.
Even in hard times, the tech firm rewarded its investors by declaring a whopping 300% interim dividend for first half (June-Sep) of this fiscal at Rs. 15 per share of Rs. 5 on par value though same as in the like period of last fiscal.
"Our operating cash flows continue to be strong while our reserves crossed $4 billion during the quarter from $3.74 billion in first quarter," Balakrishnan added.
The blue chip firm's scrip, however, lost over seven% on the Bombay Stock Exchange (BSE), trading at Rs. 2,350 during pre-noon trading and recovered in the post-noon trading to Rs. 2,407 as against Thursday's closing of Rs. 2,531.