Infosys raises yearly revenue guidance to 16.5%

- Q3 is a seasonally weak one owing to more furloughs

- Furloughs impacted margins adversely by 80bps

- Operating margin remained steady at 21.5%

- Margin improved by 40bps due to rupee fall and 70bps from cost optimisation

Bengaluru: Infosys, India's second largest IT services exporter, on Thursday posted a better-than-expected third quarter performance with sound revenue growth, steady operating margin and strong large deal momentum amid demand slowdown concerns. On the back of robust deal pipeline, the Bengaluru-headquartered firm raised its revenue growth rate outlook to 16-16.5 per cent for FY23 from 15-16 per cent earlier, though it retained it margin guidance in 21-22 per cent.

However, the company flagged up concerns relating to slackening demand in mortgage and investment banking within BFSI vertical in the US apart from slow client spending in telecom, retail, and hi-tech verticals. In Europe, the company sees pockets of weakness though there are many areas where technology spending remains intact. In the quarter ended December, Infosys posted 13.4 per cent rise in its net profit at Rs6,586 crore compared to Rs 5,809 crore reported a year earlier. Its revenue stood at Rs38,318 crore, an increase of 20.2 per cent.

Our revenue growth was strong in the quarter, with both digital business and core services growing. As reflected in the large deals momentum, we continue to gain market share. We are seeing different demand environments for different industries. Mortgage, investment banking, telcos, high-tech, retail segments are witnessing some growth constraints, while we are seeing strong growth in energy & utilities, manufacturing, and other verticals

—Salil Parekh, CEO & MD, Infosys