India’s information technology majors are now reporting double-digit profits in the third quarter on the back of large orders as the world recovers from the Covid-19 pandemic disruption.
Infosys, the country’s second-largest software services provider, has reported a 16.8% rise in consolidated net profit of 51.97 billion rupees (US$711 million) for the October-December quarter, up from 44.66 billion rupees ($611 million). The Bangalore-based software firm’s revenues grew 12.3% to 259 billion rupees ($3.95 billion) from 231 billion rupees ($3.16 billion) in the same period last year.
Infosys has also raised its revenue and margin guidance band to 4.5-5%, and 24-24.5%, respectively, on the back of strong performance. The company claimed it has signed large deals worth $7.13 billion and its digital revenues have crossed 50% of the total revenue during the quarter. The Infosys board also approved a definitive agreement to purchase the assets and transfer the employees of an Australian firm, Carter Digital, for an undisclosed sum.
During the quarter, Infosys’s free cash flow rose 19.4% from last year and stood at 56.83 billion rupees ($777 million). Its attrition rate for IT services dropped to 10% from 15.8%.
Commenting on the results, CEO Salil Parekh said: “The Infosys team has delivered another quarter of excellent results. Execution of client relevant strategy focused on digital transformation continues to drive superior growth, well ahead of the industry. The scale of new client partnerships with leading global companies such as Vanguard, Daimler and Rolls-Royce demonstrate the depth of digital and cloud capabilities of Infosys. The commitment and skills of our employees to support and drive the digital journey of clients are matters of great pride for me.”
Wipro results
Infosys rival Wipro has reported a 21% rise in its consolidated net profit for the third quarter ended December 31. It posted a net profit of 29.68 billion rupees ($406 million) as against 24.56 billion rupees in the year-ago quarter. The company’s consolidated IT services revenue rose to 153 billion rupees ($2.09 billion) from 151 billion rupees a year ago.
Wipro added 89 new customers in the IT services segment and declared an interim dividend of one rupee per share. It had recently bagged a strategic digital and IT partnership deal from Metro AG, a leading global wholesale company with food and non-food assortments. The estimated deal value for the duration of the first five years is about $700 million. Wipro will take over the information technology units of Metro AG and induct its 1,300 employees into its fold.
CEO Thierry Delaporte said, “Wipro has delivered a second consecutive quarter of strong performance on order booking, revenue and margins. Five of our sectors grew over 4% sequentially. We closed our largest ever deal win in Continental Europe. The demand environment is steadily improving, especially for digital transformation, digital operations, and cloud services. I am also pleased to share with you that we have moved into our new organization structure and are stabilizing quickly.”
Last week India’s largest software exporter, Tata Consultancy Services, posted a 7.7% rise in its net profit at 87 billion rupees ($1.19 billion), up from 81.18 billion rupees. Its revenue rose 5.42% to 420 billion rupees ($5.75 billion) from 398 billion rupees.
An interesting recent trend is the willingness of European majors to enter into deals with Indian software firms. Unlike North American players, they were a bit conservative regarding Indian tie-ups. But the recent deals by Infosys and Wipro with firms like Daimler and Metro AG reflects their increasing acceptance in the European market.