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

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

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

Investors and market watchers are expecting to hear from Infosys' new CEO Parekh on his strategy to spur growth for the company that is trying to put behind the nearly year-long public standoff between its high-profile promoters and the past leadership. And the company retained its full-year guidance of growth of 5.5-6.5% in constant currency. Its Q3 operating margin improved to 24.3 per cent, from 24.2 per cent in the September quarter.

The comment comes as Infosys reports Q3 results that beat revenue estimates but missed on EPS.

With nine months gone, the company has grown at 5.6% in constant currency terms so far. Digital services accounted for 25% of the company's revenue, while income from new services, a subset of digital, such as Nia and Edge, rose to 11.6% from 6.8% sequentially.

"We are progressing towards stability and are well positioned to serve our clients in the new areas of demand" he added.

More than the quarterly numbers, the Street is looking for signs of reassurance from the new management led by Salil Parekh that it is on top of the global transition taking place in the IT services market. In comparison, North America's contribution to the topline slipped to 60.4% from 60.6%. In US dollar terms, Infosys' net profit grew to USD 796 million in the said quarter, while revenues were at USD 2.7 billion from the year-ago period.

Operating margins inched up to 24.3% from 24.2%. "Our cash generation continued to be robust during the quarter." said M.D. Ranganath, CFO. The company also said it was dissolving the committee of directors formed previous year to support and advise the management in executing its strategy.

"The Board places on record its deep appreciation for his commitment to Infosys over the last 26 years and wishes him the very best for his future endeavours", the company said in a statement here on Friday.

Parekh's arrival follows a rocky year for the outsourcing juggernaut - one which featured a public governance clash between its co-founder and board of directors, which resulted in the sudden resignation of former CEO Vishal Sikka in August.

Revenues were at Rs17,794 crore for the quarter ended 31 December 2017 while operating profit stood at Rs4,319 crore for the quarter, showing a 0.4 per cent decline year-on-year and a 1.7 per cent growth sequentially. Annualised standalone attrition dropped to 15.8% from 17.2% and the company had 201,691 people on its rolls.

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