Global uncertainty stalls Infosys growth story
Global economic uncertainty continues to haunt the Indian IT industry as evident from the marginal (five percent) revenue growth year-on-year (YoY) its bellwether Infosys Ltd. has retained for 2012-13 fiscal in dollar terms.
"Global economic uncertainties continue to face the industry. Our revenue outlook (USD 7.3 billion) remains the same as projected earlier (in July) in dollar terms," said Infosys chief executive S.D. Shibulal in a statement Friday.
For the second time in succession, the global software major has not given revenue guidance for third quarter (Oct-Dec) of the fiscal under review (FY 2013), as repeat business from existing clients was 98 percent in second quarter (July-Sep) as against 99 percent in first quarter (April-June) and same a year ago.
Even in rupee terms, revenue guidance has been lowered 1.9 percent to Rs.39,582 crore (Rs.396 billion) from Rs.40,364 crore (Rs.404 billion) the company gave in July, projecting 17.3 percent YoY growth as against 19.7 percent YoY earlier.
"We are focused on high quality growth despite global currency and economic volatility," chief financial officer V. Balakrishnan said after the company released its financial results for second quarter (Q2).
Currency volatility, however, strengthened the rupee to Rs.53 per dollar from Rs.55 during the quarter under review (Q2).
Earlier, the company reported net profit of Rs.2,369 crore (Rs.23.69 billion) for second quarter, posting 24 percent YoY growth and 3.5 percent quarter-on-quarter (sequentially) in rupee terms.
Similarly, consolidated revenue grew 21.7 percent YoY to Rs.9,858 crore (Rs.98.58 billion) and 2.5 percent sequentially from first quarter (April-June) of this fiscal.
Under the International Financial Reporting Standards (IFRS), net income is up 4.9 percent YoY to USD 431 million and revenue 2.9 percent up YoY to USD 1.80 billion. Sequentially net income grew 3.6 percent and revenue by 2.6 percent.
Operating margin, however, declined 3.6 percent sequentially to 26.6 percent from 29.9 percent in previous/first quarter and 1.6 percent lower from 28.2 percent a year ago.
To retain its bright talent, especially laterals, with five years and above experience, the company has given 6-8 percent wage increase to its offshore techies and two percent to its onsite employees.
"We have increased employee wages, used some of our cash (reserves) in a transformational acquisition of a consulting business (Zurich-based Lodestone Holding for USD 349 million/Rs.1,932 crore) and enhanced our investment in R and D (research and development) and solutions," Shibulal pointed out.
Though the company hired 10,420 techies during the quarter, net addition was 2,610 as 7,810 employees left the company, resulting in 15 percent attrition as against 14.9 percent in previous quarter and 15.6 percent year ago.
Total employees of the company, including its overseas subsidiaries increased to 153,761 by Sep 30 from 151,151 on June 30 and 141,822 a year ago (Sep 30, 2011).
The company and its subsidiaries also added 39 clients during the quarter (Q2), taking the total to 715 from 711 quarter ago and 647 year ago.
Even in hard times, the tech firm rewarded its investors by declaring a whopping 300 percent interim dividend for first half (June-Sep) of this fiscal at Rs.15 per share of Rs.5 on par value though same as in the like period of last fiscal.
"Our operating cash flows continue to be strong while our reserves crossed USD 4 billion during the quarter from USD 3.74 billion in first quarter," Balakrishnan added.
The blue chip firm's scrip, however, lost over seven percent on the Bombay Stock Exchange (BSE), trading at Rs.2,350 during pre-noon trading and recovered in the post-noon trading to Rs.2,407 as against Thursday's closing of Rs.2,531.