BusinessTech

Infosys optimistic on growth ahead; raises FY20 revenue guidance

Amritsar, NFAPost: Backed by strong growth momentum across verticals and geographies, and robust deal pipeline, information technology giant Infosys Ltd today raised the lower end of its revenue guidance for 2019-20 (Apr-Jun). The revised revenue guidance stands at 9-10% in constant currency terms.

The company revised its guidance while posting its earnings for the quarter ended September. The second-largest IT exporter today posted a 5.8% sequential growth in its net profit for Jul-Sep, while its revenue growth for the quarter was 3.8%.

Infosys’ net profit during Jul-Sep stood at 40.19 bln rupees, while revenue totaled at 226.29 bln rupees.

Infosys optimistic on growth ahead; raises FY20 revenue guidance 1
From left: COO Pravin Rao; CEO & MD Salil Parekh; CFO Nilanjan Roy

“Our performance was robust on multiple dimensions – revenue growth, digital growth, operating margins, operational efficiencies, large deal signings and reduction in attrition”, Chief Executive Officer and Managing Director Salil Parekh was quoted in a statement.

Parekh further added that “All these are clear signs that we are progressing well in our journey of client-centricity and maximizing value for our stakeholders.”

While the company raised its revenue guidance, it maintained its guidance for operating margin for 2019-20 at the range of 21-23%.

During Jul-Sep, the company’s operating margin expanded to 21.7% from 20.5% in Apr-Jun.

“We saw expansion in operating margins during the quarter driven by improvement in operational parameters and cost efficiencies”, Chief Financial Officer Nilanjan Roy was quoted in the statement.

Infosys today also announced an interim dividend of 8 rupees per share.

Verticals

All business segments, except Retail, showed significant revenue growth during the quarter ended September.

“Q2 witnessed another quarter of all-round growth in industry segments and geographies which is a testimony to our strong credentials and client relevance.”

Chief Operating Officer Pravin Rao

The Retail segment recorded only a marginal growth in revenue during the quarter. Retail segment’s revenue grew by only 1.1% on year in constant currency terms.

According to the management the retail business is closely linked to consumer sentiment and overhang of economic slowdown and trade wars have an impact on this vertical and the company expects this segment to continue to remain volatile.

Financial services that contributes over 30% to the total revenue rose 10.3% year-on-year in Jul-Sep.

The highest sequential revenue growth during the quarter was recorded in communications, and energy and utilities segment. The communications segment revenue grew by 19.2% on year in Jul-Sep, while the energy, utilities, resources, and services segment grew by 19.1%.

Revenue in the manufacturing segment grew by 16.2% on year during the quarter, while that in the Hi-tech vertical rose 11.7% in Jul-Sep.

Life Sciences revenue recorded an on-year growth of 10.9% during the quarter ended September.

Geographies

Infosys’ confidence over growth in its largest market – North America – keeps the company’s optimism buoyant, when an evident slowdown in the developed markets are weighing on IT companies.

The company today admitted that spending from banks in the Europe is a concern, but also affirmed that growth in other areas would offset this impact.

“Europe is a bit softer, there is some impact of Brexit.”

Infosys Management

During Jul-Sep, Infosys recorded an 11.9% on-year revenue growth in North America, while its growth in the Europe was 14.6% on quarter.

Revenue growth in the Rest of the World was recorded at 1.9% and that in India was at 17.9%.

Digital

Infosys’ Digital business, which now constitutes 38.3% of total sales, grew 10.7% on quarter in constant currency basis. Total digital revenues stood at $1.2 bln during Jul-Sep.

Digital business is becoming more central to what the company is doing and investments made during the last year was relevant to how clients look at the company from a digital perspective, the company management said.

Deal Pipeline

On deal wins, the company said that deal conversions are happening for them. Large deal wins were $2.8 bln.

Infosys optimistic on growth ahead; raises FY20 revenue guidance 2
Client Data

Attrition, Utilisation

Attrition stood at 19.9% during Jul-Sep as against 21.5% in the quarter ended June.“We are especially pleased by the reduction in attrition driven by our focus on enhanced employee value proposition.”Rao said.

“We are especially pleased by the reduction in attrition driven by our focus on enhanced employee value proposition.”Rao said.

Infosys optimistic on growth ahead; raises FY20 revenue guidance 3
Effort and Utilisation
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