Hard times

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Jan 16 2012, 02:00 IST

Infosys reported 3.4% quarter-on-quarter growth in Q3FY12 revenues to $1,806m (Citi Investment Research & Analysis—CIRA $1,807m) volumes increased 3.1% while blended pricing was up 80 bps (constant currency). Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins came in at 33.7% and net profit was R23.7 bn (CIRA: R23.8 bn). Growth was driven by Europe—growth of 17% (in constant currency q-o-q). BFSI (banking, financial services and insurance) grew 4% q-o-q —supported by strong growth from products.

Growth was led by manufacturing and insurance where revenues increased by 4% and 8% q-o-q, respectively.

Smaller verticals like Transportation (+22% q-o-q) and Energy & Utilities (+9% q-o-q) also showed encouraging growth. Growth lagged in Banking (2%), Telecom (-3%) and Retail (1%). BFSI would have benefitted meaningfully from Finacle, which had a strong growth of 17% q-o-q.

Revenues increased 14% q-o-q in Europe while US was flattish. The strong growth in Europe was partly due to Finacle, Infosys’s banking solution which saw 10 wins this quarter (4 from EMEA) and 26 projects going live (10 in EMEA—Europe, the Middle East and Africa).

Infosys guided to flattish Q4 revenues—as against earlier commentary that growth will be equally spaced out this year. Management cited: (i) Likeliness of CY12 IT budgets being down now; (ii) Delays in ramp ups/decision making; and (iii) Q3 at lower end of guidance, as reasons for the change in FY12 revenue guidance from 19% (upper end) to 16.4% y-o-y.

Management indicated that: (i) Environment is challenging; delays in decision making and multiple levels of scrutiny on

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