India’s Infosys raises revenue guidance, but third-quarter profit misses estimate
BENGALURU/MUMBAI (Reuters) – Infosys Ltd, India’s second-biggest IT services company, on Friday raised its revenue growth forecast on the back of robust demand for its core services as well as its latest digital offerings from its Western clients.
Bengaluru-headquartered Infosys upped its revenue growth guidance to 8.5-9 percent in constant currency terms for the fiscal year ending March 2019, from 6-8 percent previously.
The company has a healthy pipeline of projects and deal wins across all its segments, Chief Executive Salil Parikh told a news conference.
“Our segments are doing well, both of our main digital and core services are doing well and that’s giving us some confidence for the guidance for revenue,” Parikh said.
For the quarter to the end of December, Infosys reported a 29.6 percent fall in net profit to 36.09 billion rupees ($512 million). That compared with the 41.31 billion rupees average of 25 analyst estimates compiled by Refinitiv Eikon.
A year earlier, Infosys made a profit of 51.29 billion rupees, helped by tax benefits from the company’s deal with the U.S. Internal Revenue Service, it said in a statement.
On Thursday, Infosys’ bigger rival Tata Consultancy Services Ltd reported a record quarterly profit for October-December.
Infosys said revenue from operations in the quarter rose 20.3 percent year-on-year to 214 billion rupees in what is usually a seasonally weak period for Indian IT firms due to a long holiday season in the West.
The company’s operating margin declined 110 basis points to 22.6 percent even though it retained the margin guidance in the band of 22-24 percent.
Infosys said it was “no longer highly probable” that the sale of its units Kallidus & Skava and Panaya would be completed by the end of March.
Total expenses in the quarter surged over 26 percent to 170.21 billion rupees, which included an additional depreciation and amortization charge of $12 million and a reduction of $65 million in the carrying value for its Skava units.
It also approved a buyback of shares worth 82.60 billion rupees as part of its capital allocation policy.
(Reporting by Arnab Paul and Krishna V Kurup in Bengaluru; Editing by Mark Potter and Keith Weir)