Infosys Ltd.’s quarterly profit beat estimates and margin expanded on account of a weaker rupee and cost cuts.
Margins expanded for the second straight quarter on the back of a weaker rupee—which benefits IT services providers who bill a majority of their U.S. and global clients in dollars. The Indian currency depreciated nearly 0.42 percent against the greenback in the three months ended December.
WATCH| Infosys Management Briefs Media On Q3 Performance
The company received a 50-basis-point benefit by cost cuts but that was offset by a decline of up to 35-40 basis points on account of revenue productivity per employee, Nilanjan Roy, the company’s chief financial officer, said at a post-earnings conference.
Banking, financial services and insurance vertical witnessed a “fairly sluggish” sequential performance, Chief Operating Officer Pravin Rao said. “We’ve seen more than expected furlough impact and slowness in banking (segment) in Europe partly due to Brexit,” Rao said. The firm expects some degree of volatility for the upcoming 1-2 quarters.
The company also said the audit panel report found no merit in the whistleblower allegations and found no wrongdoing by the firm or its executives, in a separate exchange filing. Last November, allegations surfaced accusing the company’s chief executive officer and chief financial officer of unethical practices.
“Top-end of the FY20 revenue growth guidance being increased is reassuring of the growth momentum,” said Urmil Shah, analyst at IDBI Capital, told BloombergQuint. “Clarity of the investigation process for whistleblower complaints is the icing on the cake.”
Q3 results further underscore that we remain steadfast in our journey of sustained client relevance and deepening engagement with them, as they partner with us in navigating their next in the digital transformation era.Salil Parekh, Chief Executive Officer and Managing Director, Infosys
Other Highlights For Q3
- Large deal signings at $1.8 billion.
- North America revenue remained little changed at 61.3 percent of overall revenue; Europe’s share declined 30 basis points over the previous quarter to 24.1 percent.
- Attrition rate fell to 19.6 percent from 21.7 percent on consolidated basis.
Shares of Infosys closed 1.5 percent higher ahead of the earnings announcement, compared with the Nifty IT Index’s 0.2 percent gain.
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