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    Infosys posts 13.4% rise in Q3 net profit, ups FY23 revenue growth guidance

    Synopsis

    But the Bengaluru-headquartered company's managing director, Salil Parekh, warned that there were signs of a "slowing global economy" that was delaying decision making in a few verticals.

    InfosysAgencies
    "Attrition reduced meaningfully during the quarter and is expected to decline further in the near-term", said Nilanjan Roy, chief financial officer.
    Bengaluru | Mumbai: Infosys posted a 13.4% growth in net profit for the fiscal third quarter, beating estimates and upgrading its annual revenue guidance, highlighting a strong pipeline of existing deals for India's second-largest software exporter.

    But the Bengaluru-headquartered company's managing director, Salil Parekh, warned that there were signs of a "slowing global economy" that was delaying decision making in a few verticals.

    Analysts said the new outlook - 16-16.5% annual revenue growth for the ongoing fiscal compared with 15-16% forecast earlier - is an indication of a tepid fourth quarter with growth likely in the -1.1% to 0.5% range.

    They added that the net hiring in the October-December quarter was its slowest in nine quarters at 1,627 - compared to 10,032 in the fiscal second quarter - which also reflected worries of a slowdown in demand.
    Infy Posts 13.4% Rise in Q3 Net Profit, Ups FY23 Revenue Growth Guidance


    Operating Margin Outlook
    Infosys retained its operating margin outlook at 21-22% for the fiscal, but the company expects to close the year around the lower end of the band.

    Net profit for the three months ended December stood at Rs 6,586 crore compared with Rs 5,809 crore a year back. Revenue came in at Rs 38,318 crore, up 20.2% year on year.

    ET's poll of analysts' estimates had pegged net profit at ₹6,506 crore, up 12%, on revenue of ₹37,858 crore, up 18.8%.

    The profit was up 9.4% while revenue grew 4.9% on a sequential basis.

    "We had an exceptionally strong growth in the first nine months with 17.8% growth (in constant currency). Then we had very strong large deal wins and the (record) number of deals is also a testament to the (demand) environment for us," said Parekh elaborating on the reasons for the guidance upgrade.

    The company reported its large deal wins at $3.3 billion, it's strongest in the last eight quarters. This compares to the $2.75 billion worth of deals reported last quarter. Also, the number of large deals that it won in the just-ended quarter - 32 - was its highest ever in a three-month period.

    Parekh said "signs of a slowing global economy" are visible in areas such as mortgages and investment banking, financial services, telecom and retail "that is leading to delays in decision making and uncertainty in spending in these areas".

    On Monday, Tata Consultancy Services reported 11% on-year growth in fiscal third quarter net profit at ₹10,846 crore, missing estimates. Revenue came in at ₹58,229 crore, up 19.1% on year for India's largest software exporter.

    The company also saw a reduction in its total workforce for the first time in 10 quarters as it slowed down fresh hiring, indicating challenges in the global demand environment owing to economic uncertainties.

    Infosys shares ended 0.62% higher at ₹1,480.55 on the BSE Thursday. The results were declared after market hours. "The key surprise was upgrading FY23 growth guidance which the street was not expecting. However, this implies a tepid Q4 with implied growth of negative 1.1% to 0.5%," said Ruchi Burde Mukhija, vice president of technology & internet equity research at Elara Capital.

    "Growth was however a bit skewed led by energy & utilities, manufacturing and life sciences which were up. BFSI contracted by 1.7% due to weakness in sub-pockets of the vertical," Mukhija said in a research note.

    Seven out of eight business verticals for Infosys saw on-year growth, led by 29.1% growth in manufacturing and 20.8% growth in energy and utilities business. In terms of geographies, Europe led the growth by registering 13.6% growth on year followed by North America, clocking a 10% growth. The India market, however, fell 11.5% on year.

    The company's quarterly operating margins dipped 200 basis points year on year and remained flat sequentially at 21.5%, as the period had more holidays and saw higher wage costs. Margins though were supported by a 40 basis points benefit from rupee depreciation and 70 basis point benefit stemming from operational efficiencies, the company said.

    Voluntary attrition for the quarter fell to 24.3% compared with 27.1% last quarter. Net hiring stood at 1,627 compared with 10,032 in the fiscal second quarter, amidst a tightening hiring ecosystem factoring in the impact of a slowdown in decision making. The total headcount stood at 346,845 for the quarter-ended December.

    "Attrition reduced meaningfully during the quarter and is expected to decline further in the near-term", said Nilanjan Roy, chief financial officer.




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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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