Home » Weekly Forecast » Infosys: Dollar revenue outlook drags on robust Q2 earnings

Infosys: Dollar revenue outlook drags on robust Q2 earnings

Infosys: Dollar revenue outlook drags on robust Q2 earnings

MUMBAI — Indian software exporter Infosys beat market expectations for the second quarter in a row on healthy volumes and improved productivity.

     But, upon posting a 12% quarter-on-quarter rise in consolidated net profit to 33.98 billion Indian rupees ($524.36 million) for the quarter ended September, the information technology firm revised downwards its revenue guidance for the fiscal year in dollar terms, triggering fears that its market comeback may take longer than expected.

     Shares of Infosys fell as much as 5% on the Bombay Stock Exchage soon after the company lowered dollar revenue guidance to 6.4%-8.4%, from 7.2%-9.2%, for the financial year ending March 2016. The stock later recovered, ending the day at 1,122.50 rupees, down 3.88% on its previous close.

     Once a bellwether of the IT sector in India, Infosys hopes to return to growth above the industry average by the fiscal year ending March 2018.

     “While results in any one quarter are transitory snapshots of a long journey, we do see our focused execution along our strategy starting to produce encouraging results for our clients, shareholders and Infoscions,” said Vishal Sikka, managing director and chief executive.

     During the quarter, rupee revenues rose 8.9% to 156.35 billion rupees, while in dollar terms income was 6% higher than the previous quarter at $2.392 billion.

     The company’s operating income rose 15.8% to 39.93 billion rupees, while margins improved by 153 basis points to 25.53%.

     According to analysts, the downward revision in the dollar revenue guidance should not be a cause for investor concern, as it factors in volatility in the Indian rupee.

     “We should not read too much into the dollar guidance. Their client additions are healthy and they are doing everything in the right direction to return to bellwether growth,” said Sarabjit Kour Nangra, vice president of IT research at Angel Broking. “The problem is in the last two quarters they have delivered better than expected topline numbers, so now expectations of top growth is also high.”

     India’s second-largest software exporter aims to more than double its revenue to $20 billion by 2020, and is betting on new service offerings and technology to fuel this growth. The company has also stepped up its acquisition activity.

     Since he took the reins of the company a year ago, Sikka has already overseen two large acquisitions. In August, the company introduced the “Aikido” package — three new services which comprise knowledge-based information technology, product design and artificial intelligence.

     According to U.B Pravin Rao, chief operating officer, the recent initiatives around service differentiation, improved client mining and a higher focus on winning large deals are already showing results, adding that Infosys will be constantly working on evolving its strategy and operational efficiencies. 

Infosys: Dollar revenue outlook drags on robust Q2 earnings

About ForexMarketz

Check Also

euro

Euro Currency is still below the Key Moving Averages

0.0 00 The euro currency formed a lower low and a lower high last week. …

Leave a Reply

Your email address will not be published.