13 Apr 2017 13:25 IST

Infosys' March quarter results disappoint

Weak guidance for FY18

Infosys has closed the fiscal 2017 with a revenue growth of 8.3 per cent in constant currency terms. This is much below the growth of 11.5-13.5 per cent, pegged for the software major at the beginning of the fiscal. The stock is down over 2 per cent in bourses.

The y-o-y growth has been slipping for the last four quarters. In constant currency terms; y-o-y growth in the March quarter was 5.3 per cent, down from 7.3 per cent in the December 2016 quarter.

Revenue growth

In the latest March quarter, revenues were flat over the December 2016 quarter in constant currency terms. Sequential revenue growth in the March quarter in dollar terms was 0.7 per cent.

The company’s largest geography- North America, saw revenues grow 1.2 per cent sequentially in constant currency terms. Europe declined by 1.6 per cent.

Revenues from the banking and financial services vertical recorded a growth of 0.5 per cent sequentially in constant currency terms. Manufacturing and hi-tech verticals saw revenues remain flat.

The company added 71 new clients during the March 2017 quarter. This is lower than the reported addition of 77 clients in the December quarter.

Operating margins

The one bright spot in the otherwise lacklustre performance, was the operating margins, which stood at 24.7 per cent for the full year 2016-17 within the guidance band of 24-25 per cent.

In the March quarter, though, the operating profit margin was 24.6 per cent, it was lower than the 25.1 per cent recorded in the December 2016 quarter.

Attrition rate (standalone) stood at 13.5 per cent, down from 14.9 per cent in the December 2016 quarter. Employee utilisation, too stood higher. It was 82 per cent for the March quarter, up from 80.1 per cent in the same quarter last year.


Infosys has guided for a revenue growth of 6.5-8.5 per cent in constant currency terms for 2017-18. In dollar terms, it expects growth of 6.1-8.1 per cent.

This is lower than 8-10 per cent revenue guidance given by Cognizant for calendar year 2017. Markets were expecting Infosys’ guidance to be higher than that of Cognizant’s.

Operating margin guidance has been given at 23-25 per cent, owing to risks from an appreciating rupee and increased pricing pressure. The company is also planning to develop onsite centres in the US, which may also add to costs and eat into margins.

The company has announced that it will pay out ₹13,000 crore -- which is $2 billion of the total cash of $6 billion with the company -- to shareholders in 2017-18. This can be through dividend or buyback.