Infosys Ltd and Wipro Ltd reported robust quarterly earnings on Wednesday, beating analysts’ estimates, as clients continued to embrace digital initiatives to serve their customers better and put together business continuity plans amid the pandemic-related disruptions.
Bengaluru-based Infosys raised its revenue growth forecast for this fiscal to 16.5-17.5% in constant currency from the earlier projection of 14-16%, buoyed by a strong deal pipeline. However, India’s second-largest software services company retained its operating margin forecast at 22-24%.
Net profit for the September quarter rose 12% to ₹5,421 crore from a year earlier, beating Bloomberg consensus estimate of ₹5,277.20 crore. Revenue grew 20.5% to ₹29,602 crore from a year ago, driven by broad-based growth across new deals as well as existing client base. That compares with analysts’ estimates of ₹29,385.70 crore.
Dollar revenue grew 19.4% in constant currency from a year ago and 6.3% sequentially to $3.9 billion, helped by large deal wins and clients’ acceleration of digital initiatives. During the second quarter, Infosys signed large deals worth a total contract value of $2.15 billion.
“As we witness a strong market opportunity with global enterprises rapidly accelerating their digital journeys, our sustained investments in expanding capabilities, including the differentiated cloud play, Infosys Cobalt, has uniquely positioned us to continue serving our clients effectively, gain market share and emerge as the preferred cloud and digital transformation partner in the market,” said Salil Parekh, chief executive officer and managing director, Infosys.
Infosys saw its digital revenue grow 19.4% from a year ago in constant currency to $2.24 billion, contributing 56.1% to total revenue for the September quarter.
According to researcher Gartner, Infosys’s performance is in line with its healthy end-user spending growth forecast. “Infosys has more than half of its revenue coming from digital sources with good growth, contributing to its performance. Infosys is a good fit for many requirements, starting from legacy to more disruptive digital components,” said D.D. Mishra, senior research director, Gartner.
Cross-town rival Wipro, which announced its earnings on the same day, reported a 19% increase in net profit to ₹2,931 crore as revenue grew 30% annually to ₹19,667 crore on the back of volume-led growth across markets and business lines. Its revenue in dollar terms grew 8.1% sequentially in constant currency to $2.58 billion, surpassing the $10-billion milestone of annualized revenue run rate.
Wipro also beat Bloomberg’s consensus net profit estimates of ₹2,857 crore and revenue of ₹19,385.20 crore. “The Q2 results demonstrate our business strategy is working well…our deal pipeline is among the highest in recent quarters,” said Thierry Delaporte, chief executive and managing director of Wipro.
Wipro, which only provides a forecast for the quarter ahead, said it expects revenue growth in the December quarter to be in the range of 2-4%, driven by an improving demand environment, especially for digital transformation-related services.
Wipro’s operating margin for the September quarter narrowed to 17.8% from 18.8% in the preceding three months. “We sustained our operating margin in the second quarter in a narrow band even after absorbing the full impact of our recent acquisitions and investing significantly in our business across sales, capabilities and talent,” said Jatin Dalal, chief financial officer, Wipro.