Infosys Q1 profit up 21.6 pct; attrition rate at record 19.5%

Written by fe Bureau | Bangalore | Updated: Jul 11 2014, 21:31pm hrs
InfosysConsolidated net profit for the quarter ended June 30 rose to 28.86 billion rupees. (Photo: AP)
Infosys, Indias second largest IT services exporter reported a 21.56% rise in consolidated net profit for the first quarter ending June 30, 2014. The company posted a net profit of Rs 2,886 crore as compared to Rs 2,374 crore in the corresponding period a year ago.

In effect Narayana Murthy has driven Infosys onto growth path as new CEO Vishal Sikka takes over at the helm.

The revenues of Infosys for the first quarter ending June 30, 2014 rose by 13.3% The company reported a revenue of Rs 12,770 crore as compared to Rs 11,267 crore in the corresponding period a year ago. Sequentially, Infosys' posted a 3.5% decline in net profit, while revenues declined 0.81%.

The company has retained its dollar revenue guidance for the current fiscal at 7-9%.

Read Reports: Infosys Result: Fact Sheet

Infosys Result: IFRS USD

Infosys Result: IFRS INR

We improved operational performance as a result of our cost optimization initiatives and a focus on increasing productivity and utilization. This partially offset the impact of compensation increases for our employees this quarter. said Rajiv Bansal, Chief Financial Officer. It will help us invest in areas that will accelerate growth.

The company added 61 clients during the quarter and its gross addition of employees stood at 11,506 during the quarter.

We saw positive trends in our large deal wins during the quarter. We believe that this momentum will hold us in good stead as we focus on increasing volumes. said U B Pravin Rao, Chief Operating Officer. Employee attrition rates are worrisome and we are implementing various initiatives to retain good talent.

We continue to enjoy the confidence of our clients by demonstrating superior execution capability and value realization. said S D Shibulal, CEO and Managing Director, Infosys. As I transition the CEO mantle to Vishal, I am confident that he will leverage this strong foundation to take Infosys to greater heights. I wish him the very best."

Dipen Shah, Head- Private Client Group Research, Kotak Securities: Infosys results were above expectations. The surprise came largely from the margins. We are positive on the long term prospects of the company and have a positive view on the stock with a medium term perspective.


* Q1 net profit at 28.86 bln rupees vs 26.72 bln estimates

* Annualised staff attrition rate rise to record 19.5 percent

* To invest more in new technology areas including cloud, mobility

* Retains FY2015 sales growth outlook at 7-9 percent

Infosys seeks revival with more tech investments, staff

(Reuters) - India's second largest IT services provider Infosys Ltd said on Friday it would boost investment in cloud computing, smartphone apps and other new technologies to win more high-margin outsourcing contracts.

The move towards these more lucrative deals heralds a change in focus by Infosys, once a trendsetter in India's $100 billion IT outsourcing industry but which has struggled in recent years to retain staff and market share.

Analysts say new technology is the next big requirement for global corporations. Infosys currently derives the bulk of its revenue from low-margin and highly competitive businesses like application development and maintenance and IT infrastructure management services.

"Change is inevitable," Outgoing Chief Executive Officer and co-founder S.D. Shibulal told reporters after Infosys posted a higher-than-expected quarterly net profit growth of 21.6 percent.

Newly appointed CEO Vishal Sikka, a former senior executive at German software company SAP AG who combines both business and tech savvy, is expected to drive the strategy change in Infosys.

Sikka will also have to stem a staff exodus, which hit record-high levels in the quarter to June 30 as well as revive Infosys' innovative edge that, some investors, said was blunted by the outgoing, conservative management.

In a sign of the times, Infosys said it won a deal in the June quarter from a leading insurance company to develop a smartphone app that allows parents to set up a driving pact with their teenagers.

Infosys, which lost its position as India's most widely held stock to mortgage lender Housing Development Finance this year, was up 1 percent at 0708 GMT at 3,325 rupees, while the Mumbai market index was down 0.9 percent.


Shibulal, the last of Infosys' seven founders to hold the role of CEO and who is leaving at the end of this month, said the company had already taken several measures to retain staff, including quarterly promotions.

"Attrition is a matter of concern to us, it is definitely higher than our comfort range," he told reporters.

Chief Financial Officer Rajiv Bansal said he expected staff exits to moderate to around 15 percent in the next few quarters, after the annualised staff attrition rate touched a record 19.5 percent in the June quarter.

Infosys, which had cash and cash equivalents worth nearly $4.2 billion at end-June, maintained its revenue growth forecast for the year to March 2015 at 7-9 percent, as analysts expected, with the company expecting to win some large deals this year.

Consolidated net profit for the quarter ended June 30 rose to 28.86 billion rupees ($480.20 million) from 23.74 billion rupees in the same year-ago period, and exceeding the 26.72 billion rupee average of analyst estimates, according to Thomson Reuters data.

Revenue in the quarter rose 13.3 percent to 127.70 billion rupees, as Infosys added 61 new clients taking the tally to 910 at the end of June. Its customers include BT Group Plc, Bank of America and Volkswagen AG.

($1 = 60.1000 Indian rupees)