INFOSYS NET UP 38%; NEW CEO TO UNVEIL ROAD MAP BY APRIL
Infosys Technologies met Street expectations by reporting a 38.3 per cent year-on-year growth in third quarter profits to ~51.29 billion, aided by a one-time gain from a US
tax reversal. Revenues of the company at ~177.9 billion grew 6.5 per cent, on the back of improved staff utilisation and higher growth from digital deals, in a traditionally weak quarter ended December 31. On Wednesday, the firm reported a one-time gain of ~14.32 billion due to tax reversals after it signed an Advance Pricing Agreement with the US Internal Revenue Service, which reflected in the rise in profit. Revenues in dollar terms grew 0.8 per cent over the previous quarter, slower than Tata Consultancy Services in the same period, which grew 1.3 per cent. Meanwhile,
Rajesh Krishnamurthy, who led the European business, and was president of energy, utilities, telecommunications, and services, quit the company, citing personal reasons. > INCOME TAX NOTICES TO COGNIZANT FOR DIVERTING PROFITS > TCS BAGS ITS BIGGEST DEAL OF OVER $2 BN FROM TRANSAMERICA
Infosys Technologies met Street expectations by reporting 38.3 per cent year-on-year growth in third quarter profits to ~51.29 billion, aided by a one-time gain from a US tax reversal. Revenues of the Bengaluru-headquartered company at ~177.9 billion grew 6.5 per cent, on the back of improved staff utilisation and higher growth from digital deals, in a traditionally weak quarter ended December 31.
On Wednesday, the firm reported a one-time gain of ~14.32 billion due to tax reversals after it signed an Advance Pricing Agreement (APA) with the US Internal Revenue Service (IRS), which reflected in the rise in profit. Revenue in dollar terms grew 0.8 per cent over the previous quarter, slower than larger peer Tata Consultancy Services in the same period, which grew 1.3 per cent.
Co-founder Nandan Nilekani set the tone for Salil S Parekh, who took over as managing director and chief executive (second non-founder in the top post) on January 2, saying stability had returned to the company. And, that Parekh would review the strategy set by former CEO Vishal Sikka and draw up his plans by April.
A stable management returns at Infosys in a tumultuous year that saw Sikka’s exit after a public spat with founder N R Narayana Murthy. To indicate this, Infosys maintained it would end the financial year with growth of 5.5 to 6.5 per cent in revenue, in constant currency. “It is absolutely stable. We have had a strong performance in a tough quarter,” said Nilekani. Analysts tracking company and sector say the company’s commentary for the year ahead is positive.
“The results in the quarter were largely in line with volume growth of 1.6 per cent. Operating margin improved by 10 bps during the quarter at 24.3 per cent, ahead of expectations. Adjusted PAT (profit after tax) is in line at ~36.9 bn (down 0.8 per cent, quarter-on-quarter).”
“Management commentary remained confident as it expects the demand environment to improve, with more discretionary spend allocations in key verticals in CY18,” wrote analysts at Emkay Research. “We believe the results are broadly in line and would now look forward to the new CEO’s commentary on the strategic road map.”
Parekh is evaluating the strategy set by Sikka, based on the four pillars of market opportunities, client relationship, people and rejuvenation of the service portfolio. The former Capgemini executive comes with strong consulting and digital expertise. He’s said he would continue with solutions such as Nia, the artificial intelligence platform that had strong traction with customers, when he presents his strategy
for the company in April.
“There was no expectation (from the founders) for me,” said Parekh, who highlighted the focus for the three months to April would be to achieve the set revenue target for the year.