Beating street estimates, global software major Infosys on Friday reported Rs 4,466 crore consolidated net profit for the third quarter (October-December) of 2019-20, registering 23.7 percent annual growth from Rs 3,610 crore in the same period a year ago.
Sequentially too, net profit grew 10.6 percent to Rs 4,466 crore in Q3 from Rs 4,036 crore a quarter ago.
In a regulatory filing on the BSE, the city-based IT major said consolidated revenue for the quarter grew 7.9 percent annually to Rs 23,092 crore from Rs 21,400 crore in the like period a year ago and 2 percent sequentially from Rs 22,629 crore a quarter ago.
Under the International Financial Reporting Standards (IFRS), consolidated net income jumped 24.8 percent year-on-year (YoY) to $627 million from $502 million a year ago and 9.6 percent sequentially from $572 million a quarter ago.
Consolidated gross income under IFRS grew 8.6 percent YoY to $3,243 million from $ 2,987 million and just 1 percent sequentially from $3,210 million a quarter ago.
Operating profit grew 4.8 YoY to Rs 5,064 crore from Rs 4,830 crore a year ago and 3.1 percent sequentially from Rs 4,912 crore a quarter ago.
Under IFRS, operating profit grew 5.4 percent YoY to $711 million from $675 million a year ago and 2.2 percent sequentially from $696 million a quarter ago.
“Operating margin at 21.9 percent declined marginally (0.7 percent) YoY from 22.6 percent a year ago and remained flat (0.2 percent) from 21.7 percent a quarter ago in rupee and dollar terms,” said the filing.
Buoyed by robust annual growth in the third quarter, the company revised upwards revenue guidance for fiscal 2019-20 to 10-10.5 percent in constant currency.
“Revenue guidance is increased to 10-10.5 percent in constant currency for fiscal 2019-20 from 9-10 percent projected on October 11, 2019,” it said in the filing.
Infosys, however, maintained the operating margin guidance range at 21-23 percent for the fiscal.
“The third-quarter results underscore that we remain steadfast in our journey of sustained client relevance and deepening engagement with them, as they partner with us in navigating their next in the digital transformation era,” Infosys Chief Executive Salil Parekh said, as per the statement.
Digital revenue shot up to $1.318 million, accounting for 40.6 percent of the total revenue ($3,243 million), with 40.8 percent YoY growth from $942 million a year ago and 6.8 percent sequential growth from $1,230 million in constant currency.
“For us, this has translated into double-digit growth year-to-date, leading to an increase in revenue guidance, accompanied by expanding operating margins,” said Parekh.
Client acquisition for the quarter, however, declined to 84 from 96 a quarter ago and 101 a year ago, taking their total to 1,384 from 1,364 a quarter ago and 1,251 a year ago.
“Overall performance during the quarter was satisfactory on multiple counts – broad-based growth, steady increase in client metrics and healthy large deal win,” Chief Operating Officer (COO) U.B. Pravin Rao said.
Large deal wins continued to be robust, with 56 percent growth in the first three-quarters of the fiscal.
“Operating margins improved during the quarter, driven cost optimization and operating leverage. Cash generation was strong with cumulative free cash flow crossing $ 1.5 billion,” said Chief Financial Officer Nilanjan Roy.
The return on equity increased 25.9 percent, driven by margin expansion and increased shareholder payouts, he said.
The company and its subsidiaries worldwide added 6,968 techies during the quarter, taking its headcount to 2,43,454 at the end of December, from 2,36,486 a quarter ago (September).
For the three quarters since April, the headcount increased by 17,953 employees in the first nine months of the fiscal from 2,25,501 from the same period a year ago.
The consolidated attrition declined to 19.6 percent from 21.7 percent a quarter ago and marginally from 19.9 percent a year ago on an annualised basis.
“We had a reduction in attrition, demonstrating the results of our efforts towards strengthening employee engagement and value proposition,” Rao added.
The company’s blue-chip scrip of Rs 5 face value gained Rs 10.70 to close at Rs 738.25 at the end of Friday’s trading on the BSE from Rs 727.55 on Thursday’s closing rate and Rs 732 from the opening price.