IT major Infosys has raised its FY 2019-20 revenue guidance to 9-10 per cent in constant currency terms, proving that the company is confident of doing well in the next two quarters and that it should end FY 2019-20 on a positive note.
In contrast, the company had earlier given a conservative guidance for FY 2019-20. Traditionally the next OND (Oct-Nov-Dec) quarter is a challenging quarter for many Indian IT services companies because it is holiday season in the US and year-end for many of the US clients. Infosys may be confident of maintaining its headway in the US geography in the next quarter by revising its revenue guidance.
In Q2 FY20, the operating margin of the company stood at 21.7 per cent—a 1.2 per cent improvement over Q1 FY20. The company also saw Q2 FY20 digital revenues at $1,230 million (38.3 percent of total revenues), a year-on-year growth of 38.4 percent and sequential growth of 10.7 percent in constant currency—all of which is a positive sign that the company's efforts towards digital business are paying off as the company had made acquisitions in the digital field to expand its digital portfolio of offerings. Also, the company witnessed double-digit growth for the fourth consecutive quarter, coupled with a 1.2 per cent operating margin expansion in Q2. The company has also declared an interim dividend of Rs 8 per share.
“Expansion in the digital business is a positive sign for the company as the company had made strategic acquisitions in the digital field to enhance its capabilities in the digital space. This is now showing positive results. Moreover, the revised guidance for FY20 shows that the company is on a growth momentum and is coming out successfully out of the growth challenges which it was facing. The company is quietly working towards achieving success under its CEO Salil Parekh,” Kris Lakshmikanth, the founder and CEO of the executive search firm Head Hunters India Limited told THE WEEK.
Some experts feel that the tough period that was hogging the company under its previous CEO Vishal Sikka is getting over. “Parekh is a media-shy person and is working strategically towards achieving growth for the company. He does not believe in self-publicity unlike Sikka and is a silent worker who has also taken the confidence of the management with him. It seems that the senior management team at Infosys has aligned well with him,” said Alok Shende of Ascentius Consulting Mumbai.
During the quarter, the company also had large deal wins to the tune of $2.8 billion that includes Toyota Material Handling North America (TMHNA) for a cloud-based IoT telematics product implementation, and Movement Mortgage, a mortgage bank in the US, to lead its digital transformation and accelerate growth. The company in collaboration with Microsoft also announced a long-term strategic partnership with JG Summit Holdings, Inc. a Manila-headquartered group to help and formulate and execute the digital transformation strategy for the group. Similarly, EdgeVerve Systems, a subsidiary of Infosys, was selected by Al Ahli Bank of Kuwait to steer its automation journey using AssistEdge Robotic Process Automation (RPA).
Parekh has stated the performance of the company had been robust on multiple dimensions—revenue growth, digital growth, operating margins, operational efficiencies, large deal signings and reduction in attrition.
