Infosys reports 6.1% rise in Q2 net at Rs3,606 cr, lowers full-year outlook

Technology major Infosys today reported a consolidated net profit of Rs3,606 crore for the fiscal second quarter ended 30 September 2016 – a sequential growth of 4.9 per cent and an year-on-year growth of 6.1 per cent.

Revenues for the quarter grew 3.1 per cent sequentially and 10.7 per cent year-on-year to Rs17,310 crore.

Operating profit for the quarter ended 30 September 2016 stood at Rs4,309 crore, showing a sequential growth of 6.5 per cent and an year-on-year growth of 7.9 per cent.

Earnings per share (EPS) stood at Rs15.77 for the quarter ended 30 September 2016, up 4.9 per cent sequentially and up 6.1 per cent year-on-year.

Infosys said it had liquid assets, including cash and cash equivalents and investments, of Rs35,640 crore as of 30 September 2016 against Rs33,212 crore as of 30 June  2016 and Rs32,099 crore as of 30 September 2015.

The board of directors has declared an interim dividend of Rs11 per share. Infosys has kept 24 October 2016 as the record date for interim dividend and 26 October 2016 as the payment date.

''We focused on strong execution in Q2 with our core IT services business showing good progress on the strength of our innovation and operational initiatives. While we continue to navigate an uncertain external environment, we remain focused on executing our strategy and increasing momentum of our software plus services model. Considering our performance in the first half of the year and the near-term uncertain business outlook, we are revising our revenue guidance.'' said Vishal Sikka, CEO.

''Longer-term, I believe it's increasingly clear that our industry's future lies in evolving from a cost-based, people-only model, to one in which people are amplified by software and AI, and are freed to innovate in areas that are strategic to our clients' future. And in this all-important transformation, I am glad to see us make continued progress," he added.

''We had well-rounded growth during the quarter in our market segments. Our delivery and support teams executed well on their plans for resource management during the quarter, leading to an uptick in utilisation,'' said U B Pravin Rao, COO, adding, ''I am also pleased that the changes we made to employee engagement, policies and rewarding high performers continue to help retain our high quality workforce.''

''Our margins expanded during the quarter on the back of further improvement in operational efficiency.'' Said MD Ranganath, CFO. ''Operating cash flows for the quarter were healthy and we effectively navigated a volatile currency environment through prudent hedging.''

Despite the second consecutive cut in full-year growth outlook, Infosys's second quarter performance was better than its larger rival TCS, which on Thursday reported 0.3 per cent sequential rise in dollar revenue for the September-quarter.

Sikka said Infosys's innovation and operational initiatives helped its core IT services business show ''good progress'' in the second quarter.

Infosys will remain focused on improved execution as it continues to navigate an uncertain external environment, the first non-founder CEO of the company said.

Operating margin rose 80 basis points to 24.9 per cent at the end of the September quarter, compared with 24.1 per cent at the end of the June quarter.

The company added 78 new clients in the second quarter, taking the total number of customers to 1,136.

Its attrition rate dropped marginally to 15.7 per cent at the end of September, against 15.8 per cent during the June quarter.  Employee utilisation excluding trainees during the second quarter of the fiscal was up by 200 bps sequentially to 82.5 per cent.

Infosys's business improved across geographies in the quarter, as revenue from the US, India and Europe improved 2.6 per cent, 29 per cent and 1.1 per cent sequentially.

Its banking and financial services arm reported a 4.6 per cent rise in revenue, in contrast with the weak performance by TCS and Cognizant Technology Solutions Corp in that area.

Infosys also revised FY 17 revenue guidance to 8.0-9.0 per cent in constant currency terms. Infosys had reported industry-leading growth of 9.1 per cent last fiscal, while Cognizant saw its revenue expand 21 per cent in calendar year 2015 (Cognizant follows calendar year as financial year).