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Published on 12/01/2018 3:47:19 PM | Source: IANS

Infosys net up 38% in Q3, lowers outlook

Global software major Infosys on Friday reported a record 38 per cent increase in consolidated net profit annually in rupee terms for the third quarter (Q3) but lowered revenue outlook for fiscal 2017-18 to 2.1-3.1 per cent on an appreciating rupee.

In a regulatory filing on the BSE, it said net profit grew 38.3 per cent annually to Rs 5,129 crore for Q3 of 2017-18 from Rs 3,708 crore in the same period year ago and 37.6 per cent sequentially from Rs 3,726 crore quarter ago.

In dollar terms too, net income shot up 45 per cent annually to $796 million from $547 million in the like period year ago and 37.6 sequentially from Rs 578 million last quarter.

With the rupee appreciating against the US dollar over the months, the company lowered its consolidated annual revenue guidance to 2.1-3.1 per cent from 3-4 per cent in rupee terms but maintained the outlook at 6.5-7.5 per cent in dollar terms for 2017-18.

The company posted consolidated revenue of $10.2 billion or Rs 68,484 crore for fiscal 2016-17.

"The annual revenue is expected to grow 5.5-6.5 per cent in constancy currency (CC) in rupee and dollar terms, but 2.1-3-1 per cent in rupee terms, with the dollar at Rs 63.88 on December 31," said the filing.

The revised outlook in rupee terms is lower than 3-4 per cent given on October 24 when dollar was Rs 65.29 on September 30 and 3-5 per cent on July 14 with dollar at Rs 64.58 on June 30.

The company reported consolidated revenue grew 3 per cent annually to Rs 17,794 crore for the quarter from Rs 17,273 crore in the same period year ago but was flat (1.3 per cent) sequentially from Rs 17,657 crore quarter ago.

In dollar terms, revenue grew 8 per cent annually to $2,755 million from $2,551 million in the like period year ago but remained flat (1 per cent) sequentially from $2,728 million quarter ago.

"Operating margin improved fractionally (0.1 per cent) to 24.3 per cent in Q3 from 24.2 per cent in the second quarter," said the city-based company in a statement, adding that the operating margin range would be 23-25 per cent for 2017-18.

Operating profit at Rs 4,319 crore was flat (0.4 per cent) annually but 1.7 up sequentially in rupee terms and at $669 million grew 4.5 per cent annually and 1.4 per cent quarterly in dollar terms.

Cash flow from operations increased by a whopping 49 per cent to $657 million from $441 million quarter ago.

"On account of the conclusion of an APA (Advance Pricing Agreement) with the US Internal Revenue Service during the quarter, net profit for Q3 increased," it added in the statement.

In accordance with the APA, the company reversed income tax expense of $225 million (Rs1,437 crore) pertaining to previous periods, resulting in the profit increasing.

The company also had written down an unspecified amount invested in its innovation fund investment DWA Nova LLC, which impacted its net profit by $11 million (Rs 70 crore).

The company also earned $31 million (Rs 198 crore) from interest on income tax refund for the quarter.

Asserting that it was a privilege to be appointed the company's Chief Executive, Salil Parekh said he would help its clients navigate the digital future and employees to build new skills and capabilities.

"We are progressing towards stability and are well positioned to serve our clients in the new areas of demand" said Parkeh in the statement.

Parekh, 53, joined the company on January 2 as the second non-promoter CEO and Managing Director after its first non-founder executive Vishal Sikka quit in August.

Prior to joining Infosys, Parekh was an executive board member of the Paris-based global consulting, technology and IT firm Capgemini for 25 years.

Chief Operating Officer Pravin Rao said increased adoption of digital offerings and new services helped stabilise price realization, and they were "able to grow client relationships across revenue categories".

Chief Financial Officer M.D. Ranganath said operating margins were stable on improvement in efficiency parameters.

"Our cash generation continued to be robust during the quarter. We also executed the share buyback of Rs 13,000 crore in line with our capital allocation policy," he added.