New Delhi: Infosys on Thursday reported a better-than-expected 13.4 per cent rise in profit in the December quarter and raised its annual sales forecast on a strong deal pipeline even as it warned of “constraints” in certain verticals amid slowing global economy.
Consolidated net profit rose to Rs 6,586 crore in October-December 2022 as against Rs 5,809 crore a year back.
The IT bellwether expects revenue growth of 16-16.5 per cent for the current financial year compared to the growth of 15-16 per cent it had projected earlier despite the “changing global conditions”.
Infosys’ earnings scorecard in the third quarter of this fiscal reflected “broadbased” growth and cooling attrition rates and the second largest IT company also asserted that pipeline for large deals remains strong.
Infosys CEO Salil Parekh noted that Q3 witnessed “exceptionally strong growth” but acknowledged that “signs around are showing a slowing global economy”.
The Bengaluru-headquartered company — which competes in the market with Tata Consultancy Services (TCS) and Wipro — also called out “constraints” in mortgage, investment banking, telecom, retail and hi-tech.
These segments, Parekh said were “more impacted, leading to delays in decision making and uncertainty in spending in these areas.”
“We are keeping a close watch on the global economy,” he said while briefing reporters about the third quarter results.
On the demand environment in Western markets, Parekh said the concerns seemed to be more pronounced in Europe than the US.
“We see in the European markets, more concerns on what’s going on with the economy... and the US market is also there, but relatively less so in the US with respect to Europe. We will see how this plays out,” Parekh said. While some of the verticals witnessed constraints, he indicated the trend was not uniform as other sectors like energy, utilities, and manufacturing continued to demonstrate robust growth.
At Rs 6,586 crore, the net profit translated to a 13.4 per cent on year growth and 9.4 per cent sequential rise.
Infosys posted a 20.2 per cent year-on-year increase in consolidated revenue for the December quarter at Rs 38,318 crore, and surprised many by hiking full year revenue guidance to 16-16.5 per cent.
The third quarter results came in better than expected both on profit and revenue metrics. Operating margins came in flat at 21.5 per cent amid “healthy revenue growth and cost optimisation benefits”.
Notably, large deal TCV (Total Contract Value) for the December quarter was the strongest in the last eight quarters at $3.3 billion, overcoming challenges of the quarter being a seasonally weaker one for the industry.
Infosys’ voluntary attrition -- a metrics keenly watched by analysts -- showed marked improvement and easing worries. Attrition fell to 24.3 per cent in December quarter.
In contrast, the voluntary attrition was at 27.1 per cent in September 2022 quarter and 25.5 per cent during three months ended December 2021.
“Year-on-year growth was in double digits for most business segments and geographical regions in constant currency terms,” Infosys said in a statement. The full year FY23 revenue guidance has been revised to 16-16.5 per cent against the previously cited band of 15-16 per cent.
The guidance revision is backed by factors such as large deal wins and strong performance, Parekh said.