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Infosys: A Good Operating Performance - Views on News from Equitymaster
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Infosys: A Good Operating Performance
Jan 13, 2018

India's second largest software firm Infosys has announced its third quarter results for FY18. The company has reported a 1.3% QoQ increase in sales and a 37.7% QoQ rise in the net profit for 3QFY18.

Performance Summary
  • In rupee terms, consolidated sales increased by 1.3% QoQ during 3QFY18. In US dollar terms and constant currency terms, sales were up 1% QoQ and 0.8% QoQ respectively. Volumes were up 1.6% QoQ.
  • Operating profit was up 2.4% QoQ. The operating margin improved to 27.1%.
  • The other income was higher by 8.9% QoQ while the profit before tax (PBT) was up 37.7% QoQ.
  • The consolidated net profit came in at Rs 51,290 bn, an increase of 37.7% QoQ. This was largely due to a tax write-back in the US.
  • The company concluded its share buyback on 27 December 2017 and 113,043,478 shares were extinguished.

    Consolidated Financials
    (Rs m) 2QFY18 3QFY18 Change 9MFY17 9MFY18 Change
    Sales 175,670 177,940 1.3% 513,640 524,390 2.1%
    Expenditure 128,650 129,770 0.9% 374,180 383,590 2.5%
    Operating profit (EBITDA) 47,020 48,170 2.4% 139,460 140,800 1.0%
    Operating profit margin (%) 26.8% 27.1%   27.2% 26.9%  
    Depreciation & Amortisation 4,560 4,980 9.2% 12,570 14,040 11.7%
    Other income 8,830 9,620 8.9% 23,330 26,590 14.0%
    Profit before tax 51,290 52,810 3.0% 150,220 153,350 2.1%
    Tax 14,030 1,520 -89.2% 42,680 29,250 -31.5%
    Profit after tax/(loss) 37,260 51,290 37.7% 107,540 124,100 15.4%
    Minority Interest & Others 0 0   -50 -710  
    Net Profit 37,260 51,290 37.7% 107,490 123,390 14.8%
    Net profit margin (%) 21.2% 28.8%   20.9% 23.7%  
    No. of shares         2,183.9  
    Diluted earnings per share (Rs)*         73.0  
    P/E ratio (x)*         14.8  

    *On a trailing 12 months basis


    Segmental Performance
    Rs m 2QFY18 3QFY18 Change
    By service offerings      
    Application development 27,405 27,403 0.0%
    Application maintenance 28,107 28,826 2.6%
    Business Process Management 8,959 9,431 5.3%
    Infrastructure Management Services 15,810 15,659 -1.0%
    Product Engineering Services 7,202 7,118 -1.2%
    Testing Services 16,513 16,726 1.3%
    Others 5,446 4,982 -8.5%
    Total IT services 109,442 110,145 0.6%
    Consulting, Package Implementation & Others 57,093 58,364 2.2%
    Products, Platforms and Solutions 9,135 9,431 3.2%
    Total Revenues 175,670 177,940 1.3%
    By new services and software      
    New Services (Cloud, Analytics, API, IoT, Cyber Security) 16,513 17,616 6.7%
    New Software (Edge, NIA, Panaya, Skava) 2,811 3,025 7.6%
    By industry vertical      
    Banking and Financial Services 47,431 46,798 -1.3%
    Insurance 11,243 12,100 7.6%
    Manufacturing & Hi Tech 38,647 38,791 0.4%
    Retail & CPG 24,242 25,090 3.5%
    Telecom 18,270 18,684 2.3%
    Energy & Utilities 9,662 10,321 6.8%
    Transportation & Logistics 3,513 3,737 6.4%
    Lifesciences & Healthcare 11,946 11,566 -3.2%
    Others 10,716 10,854 1.3%
    By geography      
    North America 106,456 107,476 1.0%
    Europe 40,755 43,417 6.5%
    India 5,797 5,338 -7.9%
    Rest of world 22,661 21,709 -4.2%
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