Infosys raises revenue guidance to 17.5%

Bengaluru: IT services major Infosys delivered a strong set of second quarter performance both in revenue and deal pipeline front, prompting the company to raise its revenue guidance further for the current financial year.

Infosys has raised its revenue guidance to 16.5- 17.5 per cent for the current financial year from earlier 14-16 per cent range. This is the third consecutive quarter of raising the growth guidance for the company, reflecting the growth momentum.

The Bengaluru-headquartered firm reported consolidated net profit at Rs5,421 crore for the September quarter, a rise of 11.9 per cent a year earlier. Infosys' consolidated revenue, increased to Rs29,602 crore for the second quarter, a rise of 20.5 per cent compared to corresponding period last year. Revenues in dollar term were at $3.99 billion for the quarter, which was a growth of 6.3 per cent sequentially in constant currency term. The growth was 19.4 per cent over the last year in CC term.

"Our stellar performance and robust growth outlook continue to demonstrate our strategic focus and the strength of our digital offerings. As we witness a strong market opportunity with global enterprises rapidly accelerating their digital journeys, our sustained investments in expanding capabilities, including the differentiated cloud play, Infosys CobaltTM, has uniquely positioned us to continue serving our clients effectively, gain market share and emerge as the preferred cloud and digital transformation partner in the market," said Salil Parekh, CEO and MD.

"Given this continued momentum, we have further increased our revenue growth guidance to 16.5-17.5 per cent," he added. However, its operating margin guidance of 22-24 per cent remained unchanged for the whole fiscal. Revenues from digital business contributed 56.1 per cent to total revenues and was up 42.4 per cent on a YoY basis. Infosys continued to see momentum in the large deal space with its total contract value (TCV) at $2.15 billion in Q2. "Our pipeline looks strong with our strong digital

and cloud capabilities. Such robust deal pipeline gives us the confidence to raise our revenue guidance," said Parekh.

Operating margin of the company stood at 23.6 per cent, down 10 basis points from the last quarter. "Our operating margins for Q2 were resilient; the impact of enhanced employee value proposition initiatives was offset by strong operating parameters, cost optimization and operating leverage," said Nilanjan Roy, Chief Financial Officer of Infosys.

However, the company continued to see high employee attrition as it reported an attrition of 20.1 per cent, which was 620 basis points higher than the last quarter.

"Attrition rate reflects the high demand for talent in the market. This situation is likely to continue for two more quarters. We have introduced skill-based incentives, promotions, and many employee-engagement initiatives to retain talent," said Pravin Rao, Chief Operating Officer at Infosys. "We have expanded our campus hiring plan and plan to hire 45,000 fresh graduates this fiscal year," he added.

Meanwhile, the COO of the company Pravin Rao will retire in December this year and the company will announce the new operating structure in coming weeks. "We will announce the future growth structure in coming weeks," Parekh said.

With regard to the smooth operations of the new Income Tax portal, Parekh said the new portal is making steady progress and around 2-3 lakh returns are being filed every day.