Infosys clocks Rs 3,398 cr net profit; Vishal Sikka says ‘will work hard to buck difficult Q3 trend’

Infosys Q2 results 2015: Infosys reported a 9.8% rise in net profit for the second quarter ending September 30, 2015. Infosys CEO Vishal Sikka called it a 'great quarter'.

Written by FE News Desk

Updated: October 12, 2015 20:36 IST

Infosys on Friday announced a final dividend of Rs 14.25 per equity share for the financial year ended March 31, 2016. Express archive photo)

Infosys, India’s second largest IT services exporter, reported a robust performance for the second quarter of FY16 with net profit rising 9.1% on a sequential basis in US dollar terms coming off from a decline in the first quarter. Similarly, the revenue momentum for Infosys continued to see an upsurge with 6% sequential rise in US dollar terms, which was the highest in the last 16 quarters.

The net profit at the end of the second quarter stood at $599 million while the revenue was $2.3 billion. Commenting on the results, Infosys CEO Vishal Sikka said, “We had a great quarter. This was the best performance in 16 quarters.”

“We are experiencing a once-in-a-generation opportunity for services company to help businesses maximise their potential with technology. While results in any one quarter are transitory snapshots of a long journey we do see our focused execution along our strategy starting to produce encouraging results for our clients, shareholders and infoscions,” he added.

Sikka ended by saying, “We are entering third quarter, which is traditionally difficult. But we will work very hard to buck this trend.”

While answering media questions, Sikka said, “We see see some headwinds heading into the next quarter but we are not revising our guidance down in any way.”

In rupee terms, the revenues at the end of second quarter stood Rs 15,625 crore recording a sequential growth of 8.9%. The net profit during this period was Rs 3,398 crore revealing a sequential growth of 12.1%.

Infosys COO U B Pravin Rao said, “We had strong all round growth during the quarter by recent initiatives around service differentiation improvement in client mining and higher focus on winning large deals.”

The big boost for Infosys during the quarter was the 150 basis points rise in operating profit margin to end at 25.5% as against 24% in the comparable previous quarter. This was primarily due to the gains from the deprecation of rupee against the US dollar and the company maintaining its employee utilisation levels.

During the quarter, Infosys signed five large deals with a total contract value of $983 million and added 82 clients with the total list crossing 1,000.

The liquid assets of the company stood at Rs 32,099 crore while the EPS was Rs 14.87 at the end of second quarter.

The Board of Directors declared an interim dividend of Rs 10 per share.

Exiting CFO Rajiv Bansal said, “It is like a dream come true. I lived my dream at Infosys. There are very exciting opportunities in the world. I want to do something more exciting, more challenging, something where I can add more value. Looking forward to the next stage of my life.”

CFO Rajiv Bansal has resigned and has been replaced by Ranganath M D, who will take over from today. Bansal’s resignation will be effective from December 31, 2015. He will stay till the end of year to help with the transition process.

Here are the key highlights:

* Revenue guidance FY16 at Rs 10-12% in constant currency terms
* Revenue guidance FY16 lowered 7.2-9.2% to 6.4-8.4% in dollar terms
* Announces dividend of Rs 10/share
* Infosys Executive Vice President and CFO Rajiv Bansal resigns; to be replaced by M D Ranganath.
* Infosys lowers FY16 revenue guidance
* Board approves 2015 incentive compensation plan
* Board approves issuance of maximum 2% outstanding shares
* Per capita revenue up 3.4% in constant currency terms
* Infosys sequential revenue growth in US dollar terms up 6% much above analyst expectations
* Infosys revenue up 17.2% in rupee terms
* Infosys net profit rises by 9.8% in rupee terms
* Five large deals of over $983 million signed in Q2 FY16
* Attrition rate up at 19.9% vs 19.2% (QoQ)
* Top 25 accounts grew 7.9% in constant currency terms
* 38 projects went live in Q2
* 82 clients were added in Q2; total number of clients more than a 1,000
* Vishal Sikka sees pricing challenges on large commoditised deals
* On some high profile exits, Vishal Sikka says, “This is part of any company’s growth. We are not overly concerned about it. Trnsition between Rajeev Bansal and Ranganath will not affect company at all.”
* Rajeev Bansal says, “Have very effective hedging strategy. Currency volatility is quite manageable.”