Infosys beats estimates with Q3 profit growth at 7.3%; raises FY21 revenue, EBIT margin guidance

infosys

Infosys, the Indian MNC that provides business consulting and IT services, has delivered a strong beat on all parameters in December quarter earnings on January 13, with upward revision in full year constant currency revenue growth as well as margin guidance following a record deal wins.

The company has raised its FY21 revenue growth guidance to 4.5-5 percent in constant currency, as well as operating margin guidance to 24.0-24.5 percent on the back of continued strong performance, which was much better than the CNBC-TV18 poll estimates of 2-3 percent and 23-24 percent respectively.

“We delivered its highest Q3 sequential growth of 5.3 percent in 8 years in constant currency. On a year on year basis, revenues grew by 6.6 percent, digital revenues grew by 31.3 percent and overall digital revenue crossed more than half of total revenues. Large deal total contract value (TCV) was at all time high of $7.13 billion,” said Infosys in its BSE filing.

Its dollar revenue grew by 6.2 percent sequentially to $3,516 million and rupee revenue increased by 5.5 percent QoQ to Rs 25,927 crore for the quarter ended December 2020, backed by ramp up of large deals and acquisitions. Dollar revenue growth was estimated at 3.6 percent and constant currency revenue growth at 3.1 percent for the quarter, as per the CNBC-TV18 poll estimates.

The digital business, which contributed 50.1 percent to total revenue, grew by 12.3 percent QoQ to $1,761 million, while the core business increased by just 0.6 percent to $1,755 million in Q3FY21.

“Execution of client relevant strategy focused on digital transformation continues to drive superior growth, well ahead of the industry. The scale
of new client partnerships with leading global companies such as Vanguard, Daimler and Rolls-Royce demonstrate the depth of digital and cloud capabilities of Infosys,” said Salil Parekh, CEO and MD.

“With the intense focus on client needs and the comprehensive foundation built on differentiated capabilities, I remain confident about the future,” he added.

Consolidated profit grew by 7.3 percent sequentially to Rs 5,197 crore, while its earnings before interest and tax (EBIT) increased 5.8 percent quarter-on-quarter to Rs 6,589 crore with margin expansion at 25.4 percent (against 25.3 percent QoQ) for the December quarter.

Numbers were well ahead of analysts’ expectations. Profit was estimated at Rs 5,084 crore on revenue of Rs 25,379 crore and EBIT was expected at Rs 6,357 crore with margin at 25.05 percent for the quarter, as per the average of estimates of analysts polled by CNBC-TV18.

The company added 4 clients in $10 million+ band and 16 clients in $1 million+ band, taking total active clients list to 1,562 at the end of December 2020, though it lost one client in $100+ million band.

The IT services attrition rate at 10 percent in Q3FY21 increased from 7.8 percent in previous quarter, though declined from 15.8 percent in Q3FY20.

Infosys shares gained 24.6 percent during December quarter and 71.8 percent in calendar year 2020, smartly outpacing the Nifty IT index which rallied 21.55 percent and 55 percent respectively in same periods.

News Source: Moneycontrol

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