Infosys Ltd forecast its revenue will grow 0-2% in constant currency terms for the year to March 31, surprising investors who expected the country’s second largest software services company to skip the guidance because of uncertainty about the depth and duration of the Covid-19 pandemic.
“Our confidence and visibility for the rest of the year are improving, driven by our first-quarter performance and large deal wins,” Salil Parekh, chief executive and managing director of Infosys, said on Wednesday.
Parekh said the forecast is based on an uptick in demand and a strong deal pipeline, especially in the financial services, healthcare, and life sciences sectors. However, he did not specify by when the company expects a recovery.
Infosys’s net profit for the fiscal first quarter beat analyst estimates, rising by 11.5% from a year ago to Rs4,233 crore as it benefited from cost-optimisation measures such as re-skilling of existing talent instead of hiring and signing of large deals worth $1.74 billion. On a sequential basis, profit declined by 2%.
The closely watched dollar revenue declined 0.3% from a year earlier and by 2.4% sequentially to $3.12 billion as challenges continued because of the Covid-19 pandemic, especially in the retail sector.
Operating margin widened to 22.7% from 21.1% in the preceding three months, “driven by a pre-emptive deployment of our strategic cost levers along with tactical opportunities triggered by the Covid-19 situation”, said chief financial officer Nilanjan Roy. “Collections were robust and capex (capital expenditure) was focused, which led to a 50% y-o-y increase in free cash flows.”
Infosys expects its operating margin for FY21 to be in the range of 21-23% as it cuts costs on travel, visas and marketing.
