See good demand environment across US, Europe: Infosys CEO

Team Udayavani, Jul 14, 2018, 11:55 AM IST

Bengaluru: India’s second largest software company Infosys today said it sees a “good” demand environment in large markets such as the US and Europe, but stuck to the previously-set revenue growth target of 6-8 per cent for the full financial year.

“Overall, we see a good demand environment across the US, Europe and Asia Pacific. In terms of the sector demand, we see strength in energy, utilities, retail, insurance and manufacturing,” Infosys CEO, Salil Parekh told reporters.

Parekh, a former Capgemini executive who, earlier this year, was brought in as the CEO to restore growth and order at the Bengaluru based IT firm after a public spat between key founders and the past management – said Infosys has clinched USD 1.1 billion of large deals during the June quarter of which 40 per cent were in financial services.

Infosys has maintained revenue growth forecast at 6-8 per cent in constant currency terms for fiscal 2019, and also reiterated the operating margin guidance of 22-24 per cent for 2018-19. For June quarter, Infosys has delivered operating margins at 23.7 per cent,hitting the upper quartile of the guidance band.

Asked why the company had not raised its revenue targets for the full year despite expressing optimism about the demand for its services, Parekh said the commentary on the demand environment was based on dialogue with clients on digital and core services which pointed towards a stable to good business outlook.

“Guidance discussion is a different discussion. We have good and a solid start with the first quarter and we will now execute on the next three quarters. We will see how it progresses, and how it plays out. We don’t have a real need to make any adjustments (in full year growth outlook),” said Parekh.

Capping the second quarter of earnings scorecard under Parekh’s watch, Infosys today reported 3.7 per cent growth in consolidated net profit at Rs 3,612 crore for quarter ended June 30, 2018. Revenues from operations grew 12 per cent to Rs 19,128 crore in the April-June quarter compared to Rs 17,078 crore in the year-ago period.

Infosys board has appointed Michael Gibbs as an independent director of the company for a period of three years, based on the recommendation of the nomination and remuneration committee of the board.

In dollar terms, the net profit declined 1.2 per cent year-on-year to USD 534 million for the quarter, including impact of USD 39 million on account of reduction in the fair value of assets held for sale.

Revenues came in at USD 2,831 million for June quarter, translating into a year-on-year growth of 6.8 per cent and sequential rise of 0.9 per cent.

Digital revenues stood at USD 803 million (28.4 per cent of total revenues), displaying a sequential growth of 8 per cent and year-on-year jump of over 25 in constant currency terms, Infosys said.

“During the three months ended June 30, 2018, on remeasurement, including consideration of progress in negotiations on offers from prospective buyers for Panaya, the company has recorded a reduction in the fair value of disposal group held for sale amounting to USD 39 million in respect of Panaya.

“Consequently, profit for the three months ended June 30, 2018 has decreased by USD 39 million resulting in a decrease in basic earnings per equity share by USD 0.02 for the quarter…” the company explained in a statement.

Infosys’ localisation efforts in the US are going in full steam ahead, including a campus in the US state of Indiana, Parekh said.

“In localisation programme, we have launched a new 75 acre campus in Indiana US and are now planning for other locations in the US, six in Europe and three in Australia. I feel we have a stable start to the year and are executing on a strategy and a three-year transformation programme,” Parekh added.

Asked about the recent anonymous whistleblower complaint questioning delay in filing of Form 20F with US SEC, Parekh said, “All whistleblower complaints are being addressed by the company and this also is being addressed. At this stage, we will not make any other statement on any specific whistleblower complaint”.