Infosys, India’s second-largest software exporter by revenue, on Thursday revised its FY23 revenue growth guidance upwards to 16-16.5% in constant currency from 15-16% it had guided in the previous quarter. This comes on the back of a strong demand environment despite some macro-economic uncertainties. The IT major maintained its operating margins guidance at 21-22% for FY23.
The Bengaluru-based company’s net profit for the December quarter rose 9.4% sequentially to Rs 6,586 crore from Rs 6,021 crore reported in the September quarter. Profits were above consensus Bloomberg estimate of Rs 6,455 crore.
The revenues for the December quarter rose 4.9% sequentially to Rs 38,318 crore on broad-based growth across business segments, service lines, and geographies. Revenues were also higher than the consensus Bloomberg estimate of Rs 37,921.90 crore.
The dollar revenue grew 13.7% annually and 2.4% sequentially in constant currency to $4.65 billion on the back of large deals worth a total contract value of $3.3 billion, the highest in the last 8 quarters. 36% of the large deals are net new deals.
“Our revenue growth was strong in the quarter, with both digital business and core services growing. This is a clear reflection of our deep client relevance, industry-leading digital, cloud, and automation capabilities, and the unrelenting dedication of our employees,” said Salil Parekh, CEO and MD, Infosys. “As reflected in the large deals momentum, we continue to gain market share as a trusted transformation and operational partner for our clients.”
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Operating margins for the December quarter remained stable at 21.5% compared with the previous quarter. “Operating margins in Q3 remained resilient due to cost optimisation benefits which offset the impact of seasonal weakness in operating parameters,” said Nilanjan Roy, chief financial officer at Infosys.
The company’s digital revenues grew 21.7% year-on-year in constant currency to $2.93 billion and contributed 62.9% to the total revenues as of the quarter ended December.
Financial services and retail are the largest verticals which together account for close to half the revenues for Infosys. Revenues from financial services grew 5.5% annually in constant currency and contributed 29.3% to the total revenue for the December quarter. Revenues from retail grew 12.7% in constant currency, contributing 14.3% to the total revenues as of December quarter.
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The attrition rate moderated to 24.3% from 25.5% in the year-ago period and 27.1% in the preceding three months, indicating supply-side pressures are gradually coming down. The management expects attrition to come down further in the near future. The total headcount as of the December quarter stood at 346,845 employees.
Analysts believe Infosys’ growth was on expected lines. “They are driving localisation strategy through global innovation hubs, experience centres, and local delivery, complemented by dedicated centres of excellence and focused teams…It distinguishes itself through business continuity, automation, and a commitment to evolving with its clients. To maintain its growth momentum, Infosys should focus on attrition rates and overall customer experience. It’s good that its strategy is in line with these requirements,” said Biswajit Maity, principal analyst at Gartner.
Infosys declared its results on Thursday after markets hours. Ahead of the results, shares of Infosys closed up 0.62% at Rs 1,480.55 on the BSE.
