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Infosys Q3 results: Profit misses view on weak demand, narrows sales forecast

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The country’s second-largest IT services firm Infosys on Thursday reported a lower-than-expected 7.3 per cent fall in net profit in the December quarter on sluggish demand from clients and cut its annual sales forecast.

Infosys(REUTERS)

The company posted a net profit (attributable to shareholders) of 6,106 crore compared to 6,586 crore in the year-ago period, Infosys said in a regulatory filing.

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The company’s consolidated revenue from operations increased 1.3 per cent to 38,821 crore during the third quarter of the ongoing fiscal from 38,318 crore a year ago.

Infosys bagged deals worth USD 3.2 billion, including a mega deal during the quarter, which included 71 per cent net new wins.

“Our performance in the third quarter was resilient. Large deal wins were strong at USD 3.2 billion, with 71 per cent of this as net new, reflecting the relevance and strength of our portfolio of offerings ranging from generative AI, digital and cloud to cost, efficiency, and automation. This is the highest deal win in the nine quarters that the company has ever had,” Infosys CEO and MD Salil Parekh said.

He said there has been no change in clients’ behaviour on spending during the reported quarter.

Infosys’ revenue will increase 1.5-2 per cent in the fiscal year through March 2024 as against the 1-2.5 per cent guidance it had given in October.

“For the first three quarters, our revenue grew 1.8 per cent over the same period last year in constant currency. Based on the performance in the first three quarters and outlook for the fourth quarter, we are tightening our revenue growth guidance for FY24 to 1.5-2 per cent growth in constant currency. Operating margin guidance for FY24 remains unchanged at 20-22 per cent,” Parekh said.

He said the company has a view on the macroeconomic situation in terms of the cycle.

“We are focused on how that’s impacted our client’s decision making. There we see financial services, telco, high tech, we still see the impact.

“Equally, we see growth in manufacturing, energy, utilities, life sciences. There’s a difference in the geographies as well, as we shared earlier between North America and Europe. At this stage, there is no more view. We are obviously very positive with the deal wins,” Parekh said.

Infosys’ employee count reduced about 7 per cent year-on-year to 3,22,663 and about 1.8 per cent as compared to the previous quarter.

Infosys Chief Financial Officer Nilanjan Roy said the company continues to monitor the employees’ utilisation and indicated that the company may not go for campus hiring in the absence of demand.

“We continue to monitor the utilisation and our flexi hiring model, with Covid, which is both off campus and on campus. It’s really on demand. At this stage we are not seeing any immediate campus requirement but for any volume increase, we have a very strong off campus programme now as well,” Roy said.

The company also said its board has approved a proposal to acquire a Bengaluru-based semiconductor design service provider InSemi for about 280 crore.

“The semicon market is expected to grow to about USD 1 trillion from USD 500 billion. This is a very exciting business in terms of semiconductor chip design…

“I think this (InSemi) will give us a strong entry into a new space and also a new set of clients which we don’t have. We are very excited about this,” Roy said.

The acquisition of InSemi is expected to close during the March quarter, subject to customary closing conditions, the company said in a filing.

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