Infosys reports 2.21% decline in Q2 net profits; revises guidance

Bengaluru headquartered information technology services major Infosys reported a 2.21 percent decline in net profits for the quarter ended September 30, 2019, at Rs 4,019 crore, against Rs. 4,110 crore in the corresponding quarter last year.

The firm also revised the lower end of its guidance from 8.5% to 9%, with the growth rate now at between 9-10%.

Total income during the quarter grew Rs 23,255 crore from Rs 21,348 crore in the same period last year. Operating margins improved and stood in the range of 21-23%. 

The IT bellwether announced an interim dividend of Rs 8 per share.

“We have grown in double digits in six of the seven segments. The growth in Europe is a bit soft but manufacturing still is doing well for us,” CEO, Salil Parekh said at a press conference at the company’s head office in Bengaluru. Parekh added that the performance was good in terms of revenue growth, digital growth, operating margins, operational efficiencies, large deal signings and reduction in attrition. 

Infosys also reported a marginally better attrition rate which improved from 22.2% in September 2018 to 21.7%  in September 2019, while digital growth stood at 38.4% year-on-year. 

Pravin Rao, COO, said that Q2 was another quarter of all round growth and pointed out that large deal wins stood at $2.8 billion. "We are making investments in digital capabilities and the cycle will go on for another 18 months," said Rao, while indicating that the company expects margins to rise up post the 18-month period. 

Commenting on the results, Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said “Except retail, most of the key verticals reported double-digit growth during the quarter. Strong TCV wins of $2.8 billion (40% y-o-y) in Q2 is the highest ever in its history. Digital revenue continued its strong revenue growth momentum at 38.4% y-o-y.”