Infosys Ltd’s fiscal first quarter results beat street estimates, with its net profit rising 1.4% to Rs 3,483 crore. This beat a Reuters consensus estimate of Rs 3,439 crore net profit for the tech giant. India’s second-largest information technology company Infosys’ April-June revenue rose 1.8% to Rs 17,078 crore. The results may provide some relief after Infosys’ bigger rival TCS yesterday disappointed with its fiscal first quarter earnings, which fell short of expectations. Infosys’ growth in the April-June period was mainly driven by key client wins, as the company added eight clients in the $100 million category. Further, it reported gross client additions of 59 in the June quarter.
However, more good news was reported on the future outlook, with the company retaining the current financial year 2017-18 revenue growth guidance at 6.5%-8.5% in constant currency terms, and also keeping operating margin guidance at 23%-25%. It reported its first quarter operating margin at 24.1%. Further, the company also raised its dollar sales growth guidance by 1 percentage point to 7.1%-9.1% from 6.1%-8.1% earlier. However, it expects its rupee revenue in FY18 to grow at a lower 3-5%.
Infosys shares soared amid a sluggish market, rising as much as 3.1% to Rs 1,006.65 in the early morning trade, but soon pared some of the gains. On the contrary, TCS shares lost after yesterday’s earnings, falling as much as 2.23% to Rs 2,389.45. Infosys CEO Vishal Sikka said that company kept persistent focus on execution in broad-based performance In the first quarter.
Brokerage Morgan Stanley appreciated the company’s earnings, saying that Infosys’ first quarter results are a beat on margins, adding that the volume growth in the quarter was at 1.7%. Domestic brokerage Motilal Oswal as well gave a mild thumbs up, saying that Infosys beat expectations marginally on both revenue and margin fronts.
The company CFO MD Ranganath said operational efficiencies enabled the company to mitigate margin headwinds in the first quarter. However, brokerage Citigroup dampened the sentiment a little, saying that the impact of the wage hikes will likely be seen in the next quarter.