Infosys’s profit surprises market

After India’s top IT service provider TCS announced disappointing numbers for the quarter, Infosys, the second-largest IT services exporter in the country reported a 6.6 per cent rise in its third quarter net profit, surpassing analysts’ expectations for the third consecutive quarter.

For the typically weak quarter, Infosys said its revenue rose to Rs 15,902 crore in Q3, with a quarter on quarter growth of 1.7 per cent. The net profit rose 6.6 per cent to Rs 3,465 crore on revenue of Rs 15,902 crore, which was up 15.3 per cent from last year.

Analysts had expected Infosys to report a dip in dollar revenues because the December quarter is typically soft for outsourcers on account of furloughs in key markets of US and Europe.

CEO Vishal Sikka credited grassroots innovation and growing adoption of Aikido services, an initiative launched by Mr Sikka in August 2015 focusing on design thinking, platforms and knowledge-based IT resulting in automation adoption as the driving factors for growth numbers.

“This combination helped us deliver encouraging results despite the traditional seasonality of the quarter and the additional headwinds, and will strengthen the execution of our strategy towards consistent profitable growth,” Mr Sikka said.

FY16 revenue was raised to 12.8 per cent to 13.2 per cent in constant currency terms. Actual revenue growth is expected 8.9 per cent to 9.3 per cent. Its strong performance comes as a relief for investors considering analysts’ prediction of slow growth in IT sector.

Commenting on the results, Dipen Shah, head of private client group research at Kotak Securities, said, “Initiat-ives like zero distance, design thinking, automation will shore up the growth rates of Infosys and sustain margins over the longer term.”

Infosys has revised dollar revenue growth guidance upwards to 8.9 per cent to 9.3 per cent from 6.4 per cent to 8.4 per cent earlier.