Infosys Q3 net profit up 7% at Rs3,708 cr

Vishal SikkaInfosys Ltd, India's second-largest IT services exporter, has reported a net profit of Rs3,708 crore for fiscal third quarter ended 31 December 2016 - a 7 per cent increase from its net profit of Rs3,465 crore for the comparable period of the previous fiscal.

Revenue for the September-December 2016-17 quarter grew 8.6 per cent to Rs17,273 crore. Third quarter revenues, however, were down 0.2 per cent sequentially in rupee terms and by 0.3 per cent in constant currency terms.

Revenues for the 9 months year-on-year grew 11.9 per cent in rupee terms and by 9.4 per cent in constant currency terms.

Operating margins expanded 0.2 per cent to 25.1 per cent and net margins expanded 0.6 per cent to 21.5 per cent sequentially.

Earnings per share (EPS) for the third quarter grew 2.8 per cent sequentially and 7.0 per cent year-on-year.

Infosys said its attrition declined sequentially by 0.8 per cent on standalone basis and 1.6 per cent on consolidated basis.

Consolidated results for the nine months ended 31 December 2016 showed an 11.9 per cent growth in revenue to Rs51,364 crore.

Net profit for the April-December 2016-17 quarter grew 8.6 per cent to Rs10,749 crore.

The company had liquid assets, including cash and cash equivalents and investments, of Rs35,697 crore as on 31 December 2016 against Rs35,640 crore on 30 September 2016 and Rs31,526 crore on 31 December 2015.

The company tightened its revenue growth forecast for the fiscal year to 8.4-8.8 per cent from 8-9 per cent in constant currency terms.

Bangalore-based Infosys said it aims to increasingly offer more sophisticated technological services.

Infosys continues to "focus sharply on the execution of our strategy," chief executive Vishal Sikka said in a statement, highlighting work in artificial intelligence, software innovation and spurring in-house creativity.

"Taking into account seasonal and other additional headwinds for the quarter, our Q3 revenue performance was broadly in line with our expectations. Beyond the quarterly numbers, we continue to focus sharply on the execution of our strategy, as reflected in the growing embrace of AI-based automation, growth in our new software-led business, delivering innovation, both incremental & breakthrough and fostering a learning-led culture," Vishal Sikka, CEO and MD, said in a statement.

"Our annual client survey results show highest customer satisfaction since we started the survey 12 years ago and increased adoption of Zero Distance and lowered attrition, especially amongst top performers – these are some of the key indicators of the growing creative confidence of Infoscions," Sikka added.

"In a seasonally soft quarter, our utilisation has remained healthy. Our continued efforts to improve employee engagement and experience resulted in a reduction in attrition. During the quarter, we added 77 clients and also added 2 clients in the $ 75mn+ revenue category. I would like to congratulate all stakeholders on crossing the $10 bn revenue milestone on LTM basis," U.B. Pravin Rao, COO, stated in a release.

"Our ongoing focus on operational efficiencies has enabled us to keep YTD operating margins at similar levels for the same period last year. Our cash generation during the quarter was strong," MD Ranganath, CFO, added.

With demand for traditional information technology services declining, Indian outsourcing firms such as Infosys are keen to provide more complex services to clients that use new technology tools like cloud computing.

Shares of Infosys rose as much as 4.5% after the results showed profit beating analysts' estimate, but erased the gains after it narrowed the revenue forecast. The stock is now trading down 0.2% at 998.05 rupees on Mumbai's BSE stock exchange.

Bigger rival TCS on Thursday reported a 10.9 per cent rise in its fiscal third-quarter net profit.