India’s Infosys posts better-than-expected Q3 profit on tax deal

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India's Infosys posts better-than-expected Q3 profit on tax deal

It had posted a net profit of Rs 3,708 crore in the year- ago period, as per IFRS accounting norms, Infosys said in a BSE filing.

Infosys said that during December 2017 quarter, it had signed an Advance Pricing Agreement with the United States administration that had led to reversal of income tax expense provision of Rs 1,432 crore.

Consolidated revenue, however, grew 8 per cent annually to $2,755 million from $2,551 million in the like period a year ago but remained flat (1 per cent) sequentially from $2,728 million a quarter ago. In constant currency terms, the growth stood at 0.8 per cent. EBIT margin forecast also retained at 23-25 percent for FY18.

The company has maintained its FY2017-18 sales growth outlook at 5.5-6.5 per cent in constant currency terms. “That confidence led me”, to make the decision to take on the CEO’s job, Parekh told reporters in a conference in Bengaluru.

Numbers were largely in line with estimates. Analysts at HDFC Securities projected profits of Rs 5,182 crore, including the tax reversal, which implies they expected Infosys to report profit growth of 1 percent, excluding the tax reversal component.

Revenue growth was driven by RCL (retail, CPG & logistics) and ECS (energy, utilities, communications and service) segments while FSI (financial services and insurance) growth remained muted, slowing down to 0.3 percent QoQ.

Geography-wise, Europe and North America aided Infosys’ business while India and Rest of World disappointed. Total active clients increased to 1,191 at the end of December 2017, from 1,173 in September.

“Operating margins were stable on the back of broad-based improvement in operational efficiency parameters. Our cash generation continued to be robust during the quarter”, MD Ranganath, CFO said.

The board has re-designated Pravin Rao as the Chief Operating Officer and Whole Time Director with effect from January 2, 2018 upon stepping down as the interim Chief Executive Officer and Managing Director in accordance with the terms of his appointment, Infosys said.

Attrition at the IT major declined to 15.8 per cent in the third quarter, from 17.2 per cent in the second quarter.

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