Technology bellweather Infosys Ltd. raised its full year revenue guidance and maintained its guidance for EBIT margins after its net profit for the December quarter managed to exceed street expectations.

The company now expects full-year revenue growth to be between 16-16.5 percent from the 15-16 percent guidance earlier. The company had revised the lower end of its revenue guidance in the September quarter.

Infosys reported a net profit of Rs 6,586 crore during the December quarter, surpassing the CNBC-TV18 poll of Rs 6,480 crore.

At $3.3 billion, large deal Total Contract Value (TCV) for Infosys was the strongest in eight quarters. The figure was also higher than the September quarter figure of $2.7 billion and the average of the last four quarters, which was $2.1 billion. It is also important to note that the company only reports deals which are in excess of $50 million.

MD and CEO Salil Parekh said that the company continues to gain market share as evident from the TCV figure.

Infosys' revenue in US Dollar terms increased 2.3 percent compared to the September quarter. The $4,659 million figure was marginally higher than the CNBC-TV18 poll of $4,621 million.

In constant currency terms, Infosys reported revenue growth of 2.4 percent on a sequential basis. The growth was much higher than street expectations of 1.2 percent. The company also outperformed TCS for the third quarter in a row which reported constant currency revenue growth of 2.2 percent.

However, Infosys may have fallen short on the operational front. While EBIT at Rs 8,242 crore was marginally below the CNBC-TV18 poll of Rs 8,298 crore, margin fell short of expectations by 38 basis points. When compared to the September quarter, EBIT margin at 21.5 percent was 5 basis points below the 21.55 percent mark.

Infosys received a 40 basis point tailwind to margins from a weak currency and a 70 basis points tailwind from efficiencies. However, all of them were offset by traditional seasonality (80 basis points) and additional spend on SGA (30 basis points).

The company has maintained its full-year EBIT margin guidance of 21-22 percent.

The management did not share any commentary on the next financial year, saying that they will look at it at the end of the final quarter of the current year.

Financial Services and Retail segments contributed to nearly half of the overall topline, while double-digit contributions also came from communication, energy & utilities, and manufacturing.

In terms of geographies, North America and Europe continue to contribute nearly 90 percent of the company's revenue. Contribution from India fell compared to the September quarter.

Moshe Katri of Wedbush Securities said the fact that Infosys has raised its guidance is a big deal and that the numbers look quite robust compared to expectations.

Net additions of employees in the quarter fell to 1,627, compared to over 10,000 in the previous quarter. However, attrition improved to 24.3 percent from 27.1 percent in September.

Also Read: Infosys hiring hits a 9-quarter low but attrition rate eases to 24.3% in Q3

First Published:Jan 12, 2023 3:47 PM IST