India’s Infosys reports strong quarter, hikes revenue forecast
Indian software giant Infosys said on Wednesday that it expects to grow faster than previously projected after reporting quarterly earnings that beat analyst estimates.
The company reported revenues of Rs296 billion ($3.9 billion) in the three months ending September 30, an increase of 20.5 per cent compared to the same quarter last year.
“On a year-on-year basis, our growth was the fastest in 11 years,” chief executive officer and managing director Salil Parekh said in a media briefing. “Given this continued momentum we have further increased our revenue growth guidance to 16.5 to 17.5 per cent.”
Revenues from digital services grew 43 per cent year-on-year, contributing more than 56 per cent of its total revenues, up from 54 per cent in the previous quarter. At the same time, revenues from the firm’s legacy consulting and technology business grew only 0.7 per cent in the three-month period.
Net profit at India’s second-largest IT company rose to Rs54.21 billion, 11.9 per cent higher than the same quarter last year.
The company maintained its operating margins at 23.6 per cent, compared to 23.7 per cent in the previous quarter despite absorbing the impact of wage hikes in the period.
However, Infosys left its forecast for operating margins at 22-24 percent for the current financial year 2021-22. The company signed deals worth $2.15 billion in the quarter, down from $2.6 billion in the previous quarter ended June 30.
Infosys said it will expand its graduate hiring programme to 45,000 recruits this year to meet increased demand for digital services, even as its attrition rate — a key metric for IT companies — spiked to 20.1 per cent from 13.9 per cent in the previous quarter.
Software companies in India are facing intense competition hiring and retaining talent as demand for digital services booms during the coronavirus pandemic. The board announced an interim dividend of Rs15 per share for shareholders.
Infosys was at the forefront of an outsourcing boom that saw India become a back office to the world, as Western firms subcontracted work to a skilled English-speaking workforce.
Over 60 per cent of its revenues come from North American markets. Shares in the company closed more than one per cent higher in Mumbai ahead of the earnings announcement.
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