Infy Sees 0.5% Revenue Growth In Q3FY14

India’s second largest IT company, Infosys has declared better-than-expected results for Q3 FY14. Though the company posted flat revenues on a sequential basis, it saw robust 19.4% growth in its net profits on a sequential basis. Topline growth stood at 25% and the bottomline went up by 21.4% on a yearly basis for the quarter. The stock is trading higher by almost 3% today.

Infosys's revenues for Q3FY14 rose to Rs 13026 crore from Rs 10424 crore in Q3FY13. However, the company posted a mere 0.5% growth on a sequential basis. Interestingly, its operating income grew at 14.9% sequentially to Rs 3259 crore from Rs 2837 crore in Q2FY14 due to a 17.1% decrease in its operating expenses. The drop in its operating expenses was mainly due to a 14.9% decrease in selling & marketing expenses and 18.7% lower administrative expenses on a quarterly basis.

The net profits increased by 19.4% to Rs 2875 crore in Q3FY14 against Rs 2407 crore in Q2FY14 on a sequential basis. On a yearly basis, the net profit notched up a growth of 21.4%.

In dollar terms, Infosys posted revenue growth of mere 1.7% sequentially for the said quarter. However, due to lower operating expenses, the operating profit saw a robust growth of 16.7% on a sequential basis. The net profit has seen 20.9% and 6.7% growth on a sequential and yearly basis respectively. This clearly shows the benefit of rupee depreciation during this quarter if we compare its numbers with those in the same period last year.

Let’s take a look at the segment-wise numbers. Infy’s Financial Services and Insurance (FSI) segment revenue rose to Rs 4367 crore during Q3FY14 from Rs 4333 crore in Q2FY14, a growth of less than 1% on a sequential basis. The FSI grew by 24.38% on a yearly basis. The manufacturing segment has registered marginal sequential de-growth to Rs 2972 crore from Rs 3005 crore in Q2FY14. The Energy, Utilities, Communications and. Services (ECS) segment revenue was at Rs 2488 crore in Q3FY14, up from Rs 2495 crore in Q2. The Retail, CPG, Logistics and Life Sciences (RCL) segment revenue was at Rs 3199 crore in the said quarter against Rs 3132 crore in Q2FY14.

Geographical segment-wise, North America had a contribution of 60% in its overall revenue, which was 1% lower on a sequential and yearly basis. Europe contributed 24.9%, an increase of almost 1% on both sequential and yearly basis. India and Rest of the World contributed 2.6% and 12.5% respectively to Infy’s overall revenue during the said quarter.

“The year ahead looks exciting for the IT services industry. We believe the global economic environment has improved and our clients are gaining confidence to invest in their strategic initiatives. We continue to differentiate ourselves to seize growth opportunities. The recent changes in organizational structure will enable us to strengthen client relationships and increase market share”, said S D Shibulal, CEO and Managing Director of Infosys.

Rajiv Bansal, Chief Financial Officer of the company added, “During the quarter, we saw early but promising results of our initiatives to increase efficiency in our operations. We continue to remain focused on making investments necessary to secure and grow our future”.

As for Infosys's outlook for the current fiscal year 2014, the consolidated revenue is expected to grow by 24.4%-24.9% compared to the last financial year. We expect the company to post satisfactory results in the time to come, and the stock would continue with its upward movement in the coming quarter too.