Infosys Q3 profit up 38.3%

Infosys reports 37.6% rise in net profit in October December 2017 quarter

Abhishek Chinnappa Reuters

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.

India's second-biggest IT services exporter Infosys Ltd posted third-quarter profit well above estimates, helped by tax benefits from the firm's deal with the US Internal Revenue Service (IRS). As per the pact, Infosys reversed tax provisions of about $225 million made in previous periods.

Chief Executive Salil Parekh, who joined the company in January, said he planned to engage with clients, employees, partners, senior executives and the company's board over the next three months to build a "comprehensive view". This had a positive impact on the consolidated basic earnings per share in the third quarter by about $0.10.

Parekh's appointment came after the abrupt resignation of Vishal Sikka, who had quit in August following public spat with co-founders led by N R Narayana Murthy. "Our Q3 performance is strong....24.3% operating margin with $593 million of free cash flow". "Beyond that, any other interaction will be a social interaction", said Parekh.

Parekh said, "We are progressing towards stability and are well positioned to serve our clients in the new areas of demand".

The spurt in profit has been largely due to a $225 million (Rs1,432 crore) tax reversal in the USA, the company's biggest market.

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In the December quarter, the U.S., which brings 62% of Infosys's revenue, grew 0.7% sequentially, while business from Europe, which accounts for 22.2% of overall revenue, jumped 5.9%.

Infosys retained its earlier growth outlook, expecting dollar revenue to expand in the range of 6.5-7.5% in the year to 31 March, or 5.5-6.5% in constant currency terms, which eliminate the effects of exchange-rate fluctuations.

"During the quarter, we provided compensation increases and higher variable payouts to our employees".

Infosys's operating margin improved 10 basis points sequentially to 24.3% from 24.2% in the July-September period. "Our investments in employees continue to deliver results as reflected in lower attrition". "Our cash generation continued to be robust during the quarter." said M.D. Ranganath, CFO. "We successfully executed the share buyback of Rs13,000 crore in line with our capital allocation policy".

"But we remain very confident about this sector and we believe that the calendar year 2018 will be much better than calendar year 2017 for the financial services", Rao said.

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