Infosys beats profit estimates: 7 top takeaways
, ETMarkets.com|
Updated: Oct 24, 2017, 05.00 PM IST
India’s second largest software exporter Infosys on Tuesday reported better-than-expected financial results in terms of profit growth for the quarter ended September 30, 2017.
This was the first quarterly earnings after co-founder and former CEO Nandan Nilekani returned to Infosys’ board after a gap of seven years as non-executive chairman on August 24.
Earlier, Infosys shares settled 1.37 per cent down at Rs 926.75 in Mumbai trade.
“Our focus on improving operational efficiencies enabled us to deliver stable margins for the quarter and at the same time provide compensation increases and higher variable payouts to employees,” Infosys CFO MD Ranganath in the earnings statement.
“We took several steps during the quarter towards our capital allocation policy covering Rs 13,000 crore share buyback, coupled with an interim dividend of Rs 13 a share for enhancing shareholder returns,” he said.
Here are the seven key takeaways from Infosys’ second quarter earnings
Bottomline beats projections
For the quarter ended September 30, 2017, the IT major reported 7 per cent quarter-on-quarter profit growth at Rs 3,726 crore against Rs 3,483 crore in the sequential quarter ended June 30, 2017. The company had posted 3.32 per cent profit growth on a year-on-year basis. Analysts in an ET Now poll had predicted a net profit at Rs 3,530.20 for the quarter.
Total income healthy
The company reported 3.12 per cent growth in consolidated total income at Rs 18,450 crore for the quarter compared with Rs 17,892 crore reported for Q1 of FY18. Revenue in dollar terms grew 2.9 per cent sequentially.
Client addition
Cut in growth guidance
Infosys cut 2017-18 revenue growth guidance to 5.5-6.5 per cent from 6.5-8.5 per cent in constant currency terms.
No wrongdoing in Panaya deal
The company reaffirmed the conclusion of the independent investigation that there was no merit to the allegations of wrongdoing with respect to the acquisition of Panaya.
The company further said the review confirmed that the company made appropriate and timely disclosures relating to severance payments to a former CFO at the end of the quarter of his resignation, and subsequently in the the company’s 20-F and annual report.
Search of new CEO begins
The process of identifying the next CEO has been initiated and is progressing well. Infosys Chief Operation Officer UB Pravin Rao had been given the interim charge of managing director and CEO on August 24.
Good deal for shareholders
Infosys declared an interim dividend of Rs 13 per equity share and fixed the record date for interim dividend as November 1, 2017 and payment date as November 4, 2017.
Business strategy refreshed
The company said its strategic direction will continue to be driven with a portfolio of market-relevant design, consulting and technology services, enabled by software. Successful execution of this strategy would position it as the partner that clients can count on to accelerate their digital transformation journey.
Over the past eight weeks, members of the management team and the committee of directors undertook a comprehensive strategy refresh exercise. With the objective of outlining a sharpened strategic direction, they reviewed all programmes across the organisation, accelerated execution plans and prioritised key areas of investments across the services and software portfolios, the statement said.
This was the first quarterly earnings after co-founder and former CEO Nandan Nilekani returned to Infosys’ board after a gap of seven years as non-executive chairman on August 24.
Earlier, Infosys shares settled 1.37 per cent down at Rs 926.75 in Mumbai trade.
“Our focus on improving operational efficiencies enabled us to deliver stable margins for the quarter and at the same time provide compensation increases and higher variable payouts to employees,” Infosys CFO MD Ranganath in the earnings statement.
“We took several steps during the quarter towards our capital allocation policy covering Rs 13,000 crore share buyback, coupled with an interim dividend of Rs 13 a share for enhancing shareholder returns,” he said.
Here are the seven key takeaways from Infosys’ second quarter earnings
Bottomline beats projections
For the quarter ended September 30, 2017, the IT major reported 7 per cent quarter-on-quarter profit growth at Rs 3,726 crore against Rs 3,483 crore in the sequential quarter ended June 30, 2017. The company had posted 3.32 per cent profit growth on a year-on-year basis. Analysts in an ET Now poll had predicted a net profit at Rs 3,530.20 for the quarter.
Total income healthy
The company reported 3.12 per cent growth in consolidated total income at Rs 18,450 crore for the quarter compared with Rs 17,892 crore reported for Q1 of FY18. Revenue in dollar terms grew 2.9 per cent sequentially.
Client addition
Cut in growth guidance
Infosys cut 2017-18 revenue growth guidance to 5.5-6.5 per cent from 6.5-8.5 per cent in constant currency terms.
No wrongdoing in Panaya deal
The company reaffirmed the conclusion of the independent investigation that there was no merit to the allegations of wrongdoing with respect to the acquisition of Panaya.
The company further said the review confirmed that the company made appropriate and timely disclosures relating to severance payments to a former CFO at the end of the quarter of his resignation, and subsequently in the the company’s 20-F and annual report.
Search of new CEO begins
The process of identifying the next CEO has been initiated and is progressing well. Infosys Chief Operation Officer UB Pravin Rao had been given the interim charge of managing director and CEO on August 24.
Good deal for shareholders
Infosys declared an interim dividend of Rs 13 per equity share and fixed the record date for interim dividend as November 1, 2017 and payment date as November 4, 2017.
Business strategy refreshed
The company said its strategic direction will continue to be driven with a portfolio of market-relevant design, consulting and technology services, enabled by software. Successful execution of this strategy would position it as the partner that clients can count on to accelerate their digital transformation journey.
Over the past eight weeks, members of the management team and the committee of directors undertook a comprehensive strategy refresh exercise. With the objective of outlining a sharpened strategic direction, they reviewed all programmes across the organisation, accelerated execution plans and prioritised key areas of investments across the services and software portfolios, the statement said.
