The country’s second largest IT services exporter, Infosys on Friday raised its dollar revenue guidance for the current fiscal, projecting a 11.5-12 per cent growth in annual revenue on the back of its third quarter earnings that beat market estimates.
The software services major’s net profit for the quarter during the October-December period grew 6.7 per cent year-on-year in dollar terms with operating margins moving up by 1.5 per cent to 25 per cent.
Infosys’ revised guidance for annual revenue comes in higher than the 9-10 per cent range previously expected, bringing it closer to the software services industry’s growth prediction of 12-14 per cent for FY14.
The quarterly performance also came amid a management churn at the company that has seen a series of top-level managerial exits in the past six months.
In dollar terms, the IT major’s profits grew 6.7 per cent year-on-year to $463 million as against $434 million. The company’s revenue grew 9.9 per cent year-on-year to $2,100 million during in the quarter. Sequentially, the firm’s profit moved up 20.9 per cent while revenues increased 1.7 per cent.
In rupee terms, Infosys capped the December quarter, traditionally a weak one for IT firms, with a 21.4 per cent increase in consolidated net profit at Rs 2,875 crore compared to Rs 2,369 crore in the year ago period.
The company’s consolidated revenues grew 24.96 per cent to Rs 13,026 crore compared to Rs 10,424 crore in the corresponding period a year ago.
Sequentially, net profit of the firm grew 19.4 per cent and revenue increased by 0.5 per cent.
JP Morgan said that Infosys reported a better than expected third quarter earnings primarily due to its margin expansion efforts while revenue performance was in line with estimates. “We believe margin expansion is the highlight of the quarter,” the brokerage said.
Infosys executive chairman NR Narayana Murthy, who came out of retirement in June to steer the company said that that cost optimisation initiatives are aimed at getting results in 6-18 months.
“Sales force restructuring will bring value between 9-12 months while delivery effectiveness will take between 12-36 months. We believe we will become the best soon,” Murthy said.