India’s second-biggest software exporter, Infosys, on Monday announced a 9.8 per cent rise in September quarter consolidated net profit but pared its sales growth forecast for the current fiscal on dollar woes. Shares of the company fell by almost 4 per cent, wiping out Rs10,416 crore from its market valuation after the company cut its dollar revenue guidance for the current fiscal.
The company also said its Chief Financial Officer Rajiv Bansal has resigned. He will be replaced by MD Ranganath, who has been with the company for nearly 15 years.
“Rajiv Bansal, Executive Vice President and the Chief Financial Officer (CFO) of Infosys since October 2012, has informed the company of his intention to resign,” Infosys said in a statement.
He will be replaced by M D Ranganath at the close of business October 12, 2015, it added.
Bansal will continue as an advisor to the CEO and the Board through December 31, 2015 to provide a smooth transition.
Consolidated net profit in July-September rose to Rs3,398 crore compared with Rs3,096 crore in the year-ago period, the company said in a statement.
Revenue was up 17.2 per cent to Rs15,635 crore in the second quarter ending September 30 from Rs13,342 crore in the year-ago period.
Infosys shares briefly rose to a record-high before reversing course and losing as much as 5 per cent. At 1200 hrs, they were down 2.5 per cent at Rs1,138.
“(Deal) pipeline looks good. We had total contract value (TCV) wins of close to $1 billion that is the largest ever... We have had great progress. However, it is still early in our journey, we are making great progress on our ‘new and renew’ strategy. All in all, it is a good and encouraging quarter,” Infosys CEO and MD Vishal Sikka said.
For the full fiscal, Infosys said revenue in dollar terms is likely to grow 6.4 per cent to 8.4 per cent, lower than previous guidance of 7.2 to 9.2 per cent, as broad weakness in IT spending and a stronger dollar are making clients wary.
While the company did not give reasons for the cut in growth forecast, the appreciation of the dollar against major currencies is said to be the main cause.
On a constant currency basis, guidance was unchanged.
lesser number of working days and furloughs, especially in sectors like insurance and retail, could have an impact on the performance of Infosys in the second half of the year, Infosys Chief Operating Officer U B Pravin Rao said.
“Historically, for the industry the second half growth has been relatively lower when compared with the first half. Q3 you typically have lower working days, furloughs... For us, Q4 has also been challenging for us in the last couple of years,” he added. Rao said this time, particularly in the October-Decemberquarter, the company expects to see these factors in other sectors as well.
“Apart from the traditional furloughs in industries like manufacturing, which we have already factored in, this time we are also anticipating furloughs impact to be much larger in couple of other industries as well which historically we would not have seen in the past and there are are certain client specific things as well,” he said.
So, based on the visibility, the second half would be challenging, he added.
Without giving reasons, Infosys said Bansal, at the end of the of the day, will be replaced by M D Ranganath, who is currently head of strategic operations, in charge of risk management, strategy and mergers and acquisitions.
“The impact of significant currency volatility was effectively mitigated by our proactive hedging programme,” Bansal said.
North America accounted for 63.3 per cent of the company’s revenues, while Europe, India and Rest of the World regions contributed 22.9 per cent, 2.3 per cent and 11.5 per cent, respectively.
During the July-September quarter, Infosys and its subsidiaries added 82 clients.
The company added 8,453 employees in the said period from June 2015 quarter, taking its total headcount to 1,87,976 as of September 30, 2015.
The company’s attrition level was at 19.9 per cent in the said quarter compared with 19.2 per cent in the June quarter and 24.8 per cent in the year-ago period.
The company declared an interim dividend of Rs 10 per equity share. liquid assets including cash and cash equivalents, available-for-sale financial assets and government bonds were Rs32,099 crore as on September 30, 2015.