Infosys recorded a robust 12.4% year-on-year increase in revenue in constant terms in the quarter ended June. The performance sent its share price soaring by 6-7% last week. The growth was faster than that in the previous quarter, and after a long time, it pulled well ahead of TCS. The latter, which announced its results earlier this week, had seen growth slow down to 10.6%, from 12.7% in the previous quarter. Infosys’s performance allowed it to raise its revenue growth forecast for the year to 8.5-10%, from 7.5-9.5%.
The company said large deal signings, at $2.7 billion, was the highest ever, and revenue from digital – which is where customer IT spends are increasingly moving to – grew by 41%. The revenue acceleration provides much-needed impetus in a lacklustre environment characterised by macroeconomic headwinds, higher visa costs and appreciating rupee.
“We have had a very strong start to the year,” Salil Parekh, CEO and MD of Infosys, said. “The large deals performance was critical. Many of our sectors are growing in doubledigits including communication and energy, utilities and resources. We see a lot of things with respect to growth well in place. We see a strong client connect and relevance with our digital offerings that’s giving us some level of confidence to raise our guidance,” he said. Digital revenue crossed $1 billion for the second consecutive quarter, and now comprises 35.7% of overall business.
However, the traditional business remained almost flat at $2 billion, which could be a cause for concern. And despite the tailwinds from digital, revenue per employee has dropped to $54,000 in the June quarter, compared to $54,900 in the year-ago period. Its net profit dropped 4.2% year-on- year to $642 million. Operating margin dropped to 20.5%, from 21.5% in the previous quarter due to higher visa costs and higher compensation outgo. “Q1 is a seasonal quarter from margin perspective (because of salary increments). We have maintained our margin band of 21% to 23% for the 2020 fiscal,” said CFO Nilanjan Roy.
