New Infosys CEO Salil Parekh starts stint with in-line Q3 numbers

Representaional purpose

Representaional purpose

Infosys, India's second-biggest software services provider by revenues, has reported a 38.3 per cent growth in its fiscal third quarter net profit even as it retained its full-year sales forecast, after growing revenues by 1 per cent for the three months ended 31 December. Analysts at HDFC Securities projected profits of Rs 5,182 crore, including the tax reversal, which implies they expected Infosys to report profit growth of 1 percent, excluding the tax reversal component.

The company reported a total revenue of Rs 17,794 crore for the October-December 2017 quarter, up by 1% from the Rs 17,567-crore revenue in the previous quarter. Revenues during the period rose 1.3 percent sequentially to Rs 17,794 crore.

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. The company maintained its FY 18 revenue guidance at 5.5-6.5% in the constant currency.

Just like TCS, Infosys Q3 profit and revenue numbers were in line with the estimates.

The 38.3 percent jump was largely due to a $225 million (Rs 1,432 crore) tax reversal in the USA, the company's biggest market.

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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). "We had 8% year-on-year growth and 24.3 per cent operating margin with $593 million of free cash flow". As per the pact, Infosys reversed tax provisions of about $225 million made in previous periods.

Addressing the first press conference post his appointment as CEO of the IT major, Parekh said the ongoing digital disruption has created a new opportunity for the company."While clients are facing digital disruption, we see an opportunity rising for us".

"We are progressing towards stability and are well positioned to serve our clients in the new areas of demand", Parekh said, referring to the recent turmoil surrounding the departure of his predecessor Vishal Sikka.

In Q3 results, the operating margin was improved to 24.3% from 24.2% in the September quarter. "Our cash generation continued to be robust during the quarter." said M.D. Ranganath, CFO.

He said that building on strategy initiated by Infosys Chairman Nandan Nilekani, the company is conducting a review structured around four dimensions, namely, new market opportunities, client relationships, people, and service offering portfolio.

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