Infosys Ltd

Company Description
Infosys is India’s second-largest provider of consulting and IT services to clients across the globe. It is also among the fastest-growing IT services organizations in the world and a leader in the offshore services space having pioneered the Global Delivery Model. The company provides business consulting, application development and maintenance, and engineering services to 1,364 active clients across Banking, Financial Services, Insurance, Retail, Manufacturing and Utilities verticals. Infosys is a global leader in next-generation digital services and consulting. It enables clients in 46 countries to navigate their digital transformation. With over three decades of experience in managing the systems and workings of global enterprises, Infosys has expertly steered its clients through their digital journey.

Infosys is a global leader in next-generation digital services and consulting. It enables clients in 46 countries to navigate their digital transformation. With over three decades of experience in managing the systems and workings of global enterprises, Infosys has expertly steer their clients through their digital journey.

Revised guidance for FY20
Infosys has increased its lower end of FY20 revenue guidance from 8.5% - 10% in constant currency (CC). Constant currency implies eliminating the effect of exchange rate fluctuations when calculating financial performance numbers. The revised FY20 revenue guidance is 9%-10% in CC. The company maintained FY20 operating margin guidance range of 21% - 23%.

Solid half yearly performance
H1 revenues grew by 11.9% in CC, operating margin stood at 21.1%. Q2 FY20 revenues grew YoY by 9.8% and 3.8% QoQ in INR terms. Q2 FY20 operating margin stood at 21.7%, 1.2% improvement over Q1 FY20.

Robust growth in Digital revenue
Infosys’ Digital revenue, in CC terms, grew at 33.8% during FY19 and now comprises a third of the company’s total revenue. Q2 FY20 Digital revenue stood at $1,230 million (38.3% of total revenues), YoY growth of 38.4% and QoQ growth of 10.7% in CC.

Strong deal pipeline
Infosys sustained momentum of large deal wins quarter after quarter. Infosys reported large deal-wins over $2.8 billion for Q2 FY20, deal-wins for Q1 FY20 aggregated to $2.7 billion. The company indicated that 10% of deal wins in 2Q of $2.8 billion were new deals.

Emerging concerns on unethical business practices
In response to whistleblower complaints, the Audit committee has appointed law firm Shardul Amarchand Managaldas & Co. to conduct an independent investigation. To ensure independence in these investigations, the CEO and CFO have been recused from this matter. We expect the board to remain committed to highest standard of corporate governance and protect the interests of all stakeholders. We hope decisions by the audit committee would be taken quickly and the corporate governance overhang will not persist for long as that would not be good for business. The company has stated that it will deal with the whistleblower complaints head-on and maintain an untarnished record of ethical business practices.