Infosys sticks to revenue growth guidance as quarterly profit rises

By Sankalp Phartiyal and Krishna V Kurup

MUMBAI/BENGALURU (Reuters) - Infosys Ltd retained its revenue forecast for the current financial year, with the chief of India's second largest IT firm saying the demand for its services remained strong.

Infosys was beginning to make progress on a three-year roadmap, Chief Executive Salil Parekh told a news conference on Tuesday, after the company posted quarterly net profit that exceeded estimates.

Parekh has set out a three-year plan for Infosys - the first year in fiscal 2019 to stabilise, the second year to start to build momentum and the third year to start to accelerate.

"We see a strong demand outlook, we see good fundamentals in the U.S., we see strong macro in the continental European market," Parekh said.

"Our deal wins are strong in Q2, also strong in Q1," he added, as the company maintained its 6-8 percent revenue growth guidance for the year to March in constant currency terms.

"All in all our view is this is a fairly comfortable outlook in terms of demand and revenue growth for us."

Infosys' retention of its guidance "despite reinvestment of entire currency gains back into business indicate significant growth challenges going forward," brokerage Emkay Global Financial Services said in a note after the results.

Weakness in the Indian rupee, which has fallen about 13 percent so far this years, helps exporters who bill clients in dollars.

Bengaluru-headquartered Infosys posted a 10.3 percent rise in net profit to 41.10 billion rupees ($559.49 million) in the quarter to the end of September, helped by large deal wins that crossed $2 billion.

Analyst had, on average, expected a profit of 40.51 billion rupees, according to I/B/E/S data from Refinitiv.

Bigger rival Tata Consultancy services last week posted a record net profit and forecast double-digit revenue growth this financial year, driven by strong demand for digital services and healthy spending by key clients.

Chief Operating Officer Pravin Rao said Infosys' financial sector clients, accounting for over 30 percent of the company's revenue, were once again beginning to spend on technology services due to higher interest rates in the United States, the biggest market for India's software services.

"We're seeing spend come back in North America which was predominantly soft," Rao said.

"We've also seen growth coming back in many of the large accounts where in the last one or two quarters we had seen some softness."

The company, which has 23 clients generating sales of more than $100 million for it, said its revenue from digital services - such as cloud, big data and analytics which accounted for more - accounted for $905 million or nearly a third of its overall revenue.

Revenue from operations rose 17.3 percent to 206.09 billion rupees.

Infosys added 7,834 employees on a net basis, compared with a reduction in the same period last year.

Still, attrition is higher than the company's expectations and it is working on "several interventions" including promotions, compensation and benefits, and creating new career streams, Rao said.

Shares in Infosys ended 0.5 percent down ahead of the results in a broader Mumbai market up 0.7 percent.

($1 = 73.4600 Indian rupees)

(Reporting by Sankalp Phartiyal and Krishna V Kurup; Additional reporting by Tanvi Mehta and Sharnya G; Editing by David Goodman)