Bengaluru,jan.10 : Vishal Sikka’s honeymoon with the markets continue. His second outing to announce Infosys’s results, on Friday, sent the share price soaring by 5%. His first, in October, had pushed the share price up by 6.5%.
Since August 1, when Sikka took over as CEO, the share price is up 24%; during the same period, market leader TCS’s share price is down marginally.
Infosys’s December quarter net profit and operating margin came in better than analysts’ estimates. Net profit at $522 million was up 2.2% sequentially, and 12.7% from a year ago.
Operating margin was up 60 basis points at 26.7% because of higher utilization (82.7% excluding trainees, compared to 82.3% in Q2), higher proportion of work done offshore (as against doing it onsite which is more expensive), and rupee depreciation.
Revenue was $2,218 million, up 0.8% sequentially and 5.6% from a year ago. The dollar revenue was impacted significantly on account of severe exchange rate changes between the dollar and other global currencies. On a constant currency basis, revenue was up 2.6% sequentially and 7.9% from a year ago. The revenue growth was in line with most analysts’ estimates.
Sikka said volume growth at 4.2% was the highest in three years, indicating that order flow was improving. But pricing, he said, was under pressure. He expects that to continue in the longer term, and said the only way to counter that and keep margins up was through use of automation and artificial intelligence, projects that have been core to Sikka’s strategy.
Sikka said the company was holding on to its target of touching industry average growth rates by mid 2016. The company’s revenue guidance for the year remains at 7-9%. That’s lower than the 11.5% it did last year and the 13-15% that IT industry body Nasscom expects the industry to grow by this fiscal.
Employee attrition rate in the December quarter touched a new high of 20.4%. But the rate is calculated on a last-twelve-months basis. Rao said attrition rates on a month-on-month basis had been coming down in the December quarter on account of a number of measures the company had taken to fulfil employee aspirations. In the latest quarter, the company has given 100% variable payout, the second successive quarter that it is doing so.