Infosys Q2 Profit Beats Street, Shares Fall on Guidance Cut, CFO’s Resignation

The exits come even as Infosys announced a 13% revenue guidance for the fiscal, on the back of a 9.8% rise in profit for the second quarter.

A CNBC-TV18 poll had seen the company’s profit at Rs 3,244 crore, revenue at Rs 15,210 crore and dollar revenue growth at 3.6 percent.

In rupee terms, net profit grew 12.1 per cent quarter on quarter and 12.1 per cent year on year to Rs 3,398 crore.

Reacting to the earnings, Infosys shares initially surged 4.4 percent to touch a high of Rs 1,219, but soon shed all its gains to tumble to a low of Rs 1,108.90, down 5 percent. He will be replaced by M.D. Ranganath at the close of business October 12.

Now the Executive Vice President and Head of Strategic Operations, Ranganath has held several leadership positions during a tenure of almost 15 years with Infosys. Dollar revenue climbed 6 percent-the steepest in the last 16 quarters-to USD 2.392 billion, and 6.9 percent in constant currency. “From automation and AI helping to simplify and enable existing landscapes as well as build intelligent systems that help us solve our most complex emerging problems, to education and design helping us to rethink the human experience and helping uncover our most important horizons, a great services organization can truly partner with and amplify businesses”.

“As Infosys’ CFO, Rajiv has led our financial strategy and has been instrumental in bringing us to this point in our transformational journey”.

India has become a back office to the world as companies have subcontracted work to firms such as Infosys, taking advantage of the country’s skilled English-speaking workforce. The markets seem to be factoring in that Infosys stock has also run up quite a bit – about 44 per cent – since Sikka took charge in August 2014. “Increase in revenue productivity was significant, volume growth was robust, client metrics and utilisation improved while attrition remained stable”, said UB Pravin Rao, COO, Infosys.

Infosys said it signed five large deals with a total contract value of $983 million in the just ended quarter and added 82 clients with total number of clients crossing 1,000.

At the end of the September quarter, the liquid assets including cash and cash equivalents, available-for-sale financial assets and government bonds were Rs. 32,099 crore as compared to Rs. 30,235 crore as on June 30, 2015.

Typically, for the export-heavy Indian IT industry, the July-September stretch is a seasonally strong quarter as client budgets for IT spends starts to ramp up.