Infosys’ numbers for the September quarter — both revenue and profits came well ahead of the market’s expectation for the second quarter in a row.

The company recorded a sequential revenue growth of six per cent (in dollar terms) against the expected 3.6 per cent. Volume growth was about 3.7 per cent. Strong growth in North America (6.1 per cent vs. 5.1 per cent in June quarter) and Europe (8.3 per cent vs. 1.2 per cent), higher traction in financial services and retail segment and improved pricing helped. It added 24 new (net) clients and saw three fresh orders to the $75 million plus bucket.

In rupee terms, revenue growth came in at 8.9 per cent sequentially.

Attrition (on standalone basis) was 14.1 per cent, lower than 14.2 per cent in the June quarter and 21.1 per cent in the September 2014 quarter. Utilisation stood at 81.3 per cent for the quarter, up by over one percentage point sequentially.

Margin surprise

Infosys reported a 12.1 per cent sequential growth in net profit (in rupee terms). In the June quarter, it had reported a 2.1 per cent decline in profit. Operating profit margins improved 1.52 percentage points (versus market expectations of a 90-100 basis points gain) from the June quarter to 25.54 per cent, thanks to improved utilisation, advantageous cross-currency movements (by about 70 basis points) and better operational efficiency.

Lower dollar guidance

Infosys maintained its constant currency revenue guidance for FY16 at 10-12 per cent, but revised the dollar guidance down.

From 7.2- 9.2 per cent earlier, the revenue guidance for FY16 in USD terms, was cut to 6.4-8.4 per cent. Nasscom’s target for the industry for the year was 12-14 per cent.

The company’s management outlined that in the second half of the year segments including insurance, retail and energy may see some pain as clients are cutting costs.

Further, headwinds on a few orders and the outlook on currency rates have been taken into account on arriving at the guidance said the company.

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