Infosys on Monday surpassed Street estimates when it posted a 6.1 per cent growth in net profit for the March quarter of 2019-20, but its CEO cautioned that the company will be facing a challenging quarter as the coronavirus induced global lockdown has choked several industries.
The country’s second-largest IT services company —which saw revenue growing 8 per cent to Rs 23,267 crore — said it will honour all the offers already made to freshers and lateral hires but has suspended salary hikes and promotions for staff.
The company posted a net profit of Rs 4,321 crore compared with Rs 4,074 crore a year ago — a growth of 6.1 per cent. However, net profit fell sequentially by 3.1 per cent against Rs 4,457 crore recorded during the December quarter of 2019-20.
Analysts were expecting the company to post a net profit of around Rs 4,200 crore. With the company feeling the pinch of the lockdown from the second week of March, analysts had expected it to have some bearing on its numbers.
Revenues for the year as a whole came in at Rs 90,791 crore — a growth of 9.8 per cent in constant currency terms. This was, however, lower than its earlier projection of a revenue growth of 10-10.5 per cent.
No guidance
Infosys on Monday said it will not provide a revenue and margin guidance for the current fiscal year.
“Our sense is that in the near-term we will see an impact on our business. We do not have a clear view of when the recovery will come back,” Infosys CEO and MD Salil Parekh told reporters.
However, he pointed out that the current environment also presents several opportunities to Infosys, particularly in areas such as cloud computing.
“I am optimistic about the medium term,’’ he said.
“We continue to remain focused on execution excellence in a period of high uncertainty. Our relentless focus on liquidity will be supported by our strong balance sheet of $3.6 billion cash, backed by accelerated cost take-outs and operational rigour,” Nilanjan Roy, chief financial officer, said.
Responding to a query, Pravin Rao, chief operating officer, indicated that while discretionary spending has suffered in several industries and its impact could be felt in the current quarter, all activity has not stopped and Infosys continues to clinch deals.
During the fourth quarter ended March 31, 2020, digital revenues constituted close to 42 per cent of the total revenues, up from 40.6 per cent in the preceding three months.
In terms of revenues by business segments, financial services showed a constant currency growth of 5.7 per cent, while it stood at 4.2 per cent in the case of retail.
Parekh’s views are similar to the sentiments echoed by peers such as Wipro and Tata Consultancy Services — both had cited future business uncertainty while announcing their quarterly earnings last week.
Incidentally, Wipro had resisted from providing a revenue growth forecast for June quarter, while x had retracted its annual outlook for 2020.
The results were announced after the close of trading hours. Infosys scrip closed at Rs 652.90 on the BSE, 3.7 per cent higher than the previous close.
