Infosys back on track
Q1 net up 3.7%, keeps revenue guidance unchanged We operate in an environment which has several challenges. There are regulatory changes happening...
Q1 net up 3.7%, keeps revenue guidance unchanged We operate in an environment which has several challenges. There are regulatory changes happening in various parts and we have seen changes in Canada and in Australia. US immigration bill is in progress. We remain cautiously optimistic," - S D Shibulal Bangalore (PTI): IT major Infosys on Friday posted a near 4 per cent increase in its consolidated net profit for the April-June quarter, thus meeting market expectations. However, the firm maintained a "cautiously optimistic" approach keeping its US dollar revenue guidance unchanged for this fiscal. The Bangalore-based firm, which last month saw the return of its co-founder NR Narayan Murthy in the backdrop of a below than expected performance in the past quarters, added that wage hikes announced in June would have an impact of about 300 basis points on its margins in the next quarter. The company's consolidated net profit rose by 3.7 per cent to Rs 2,374 crore for the April-June quarter against Rs 2,289 crore in the year-ago period. Its consolidated revenues rose 17.2 per cent to Rs 11,267 crore from Rs 9,616 crore in the year-ago period. "Despite facing an uncertain macro environment, changing regulatory regime and a volatile currency environment, we have done well in Q1 and are cautiously optimistic about rest of the year," Infosys CEO and MD S D Shibulal said. While, India's second largest software services exporter kept its US Dollar revenue guidance unchanged at 6-10 per cent for 2013-14 fiscal, it revised its rupee revenue guidance upwards to 13-17 per cent from 6-10 per cent earlier on account of depreciation in the Indian currency. "We operate in an environment which has several challenges. Discretionary spend continues to be under stress. There are regulatory changes happening in various parts of the world. We have seen changes in Canada and as recent as a week back, in Australia. US immigration bill is in progress. We remain cautiously optimistic. We have not revised our guidance," Shibulal said. On the issue of wage hike affecting margins, Infosys CFO Rajiv Bansal said: "We have announced compensation increases for FY'14 effective July, which will affect our margins in the future quarter." On discretionary spend, Bansal said: "we are not seeing an uptick in this in the market and that is likely to put more pressure on pricing because we have disproportionately higher percentage of our revenues coming from discretionary spend." The company added 66 clients in the April-June quarter taking the total number of its active clients to 836, which includes 7 large deals. On industry-wise revenue break-up, insurance, banking & financial services was the top earner followed by retail & life sciences, manufacturing and energy, utilities, communications & services during the same period. The firm is trying to turn around after its struggling phase with more focus on higher value software and consulting services. Analysts cheered the results posted by the firm, which was once considered an IT bellwether, but cautioned that the performance cannot be perceived as a breakthrough unless it is consistent for one more quarter. �in talks with clients on Immigration Bill Bangalore (PTI): Infosys is in discussion with clients for a contingency plan to ensure business continuity in the event of the US immigration reforms bill becoming a law. A major part of revenue for India's second largest IT services exporter comes from the US and North America. The Bill, which was recently passed by the US Senate, and is before the House of Representatives, proposes several changes including higher visa costs and increase in wages for H-1B visa holders. If approved by the House of Representatives, the Bill will be sent to President Barack Obama for signing it into law. "It (immigration bill) is a matter of concern for the industry. It could have an impact on operations of IT firms. But it is not concluded yet. We are watching carefully," Infosys MD S D Shibulal said. Among other provisions, the bill proposes to increase the H-1B visa fees to about $5,000 per application.