India's Infosys posts better-than-expected Q3 profit on tax deal

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Infosys Q3 profit jumps 38% to Rs 5129 crore on income tax reversal

The conclusion of the Advance Pricing Agreement with United States authorities led to the reversal of income tax expense provision of Rs 1,432 crore, which had a positive impact on the consolidated basic earnings per share in the quarter by about Rs 6.29.

Parekh also said that he will lay out strategic priorities for the company by April, for which a review is now underway. Accenture's strong performance in recent times is seen to be the result of its robust consulting capabilities, something seen to be critical in today's times when a whole new set of digital technologies have emerged. "Beyond that, any other interaction will be a social interaction", said Parekh.

Operating profit at Rs 4,319 crore was flat (0.4 per cent) annually but 1.7 up sequentially in rupee terms and at $669 million grew 4.5 per cent annually and 1.4 per cent quarterly in dollar terms.

"Infosys' results were largely in-line for the quarter".

Analysts pointed out that even if the benefit from the tax deal was excluded, the profit number would be in line with estimates.

Based on the client industry vertical, Banking and Financial Services, Insurance (BFSI) was the largest contributor to the revenues with a contribution of 33.1%, followed by Retail and Life Sciences (22.7%), Manufacturing and Hi-Tech (21.8%), and Energy, Utilities, Communications and Services (22.4%), during the quarter.

Geography-wise, Europe and North America aided Infosys' business while India and Rest of World disappointed.

It added one client in the above $100 million billing bracket and three in the above $75 million bracket.

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Infosys total employees stood at 2,01,691 as on December 2017, higher from 1,98,440 employees as on September 2017 and 1,99,763 employees in December 2016.

Operating profit (EBIT-earnings before interest and tax) margin has seen expansion of 10 basis points at 24.3 percent during the quarter, which was better compared to 24.1 percent expected by analysts.

M.D. Ranganath, CFO said operating margins were stable due to broad-based improvement in operational efficiency parameters.

"On account of the conclusion of an APA (Advance Pricing Agreement) with the US Internal Revenue Service during the quarter, net profit for Q3 increased", it added in the statement.

For the first time in years, Infosys generated $593 million in free cash flow.

The company said that its attrition rate, which is the ratio of individuals who left the company to those who joined it, declined to 15.8% in the third quarter from 17.2% in the second. The reversal of the tax provisions had a positive impact on the consolidated basic EPS for the quarter ending December 2017 by Rs 6.29, Infosys said.

The stock price recovered in late trade on Friday to close higher by 0.26 percent at Rs 1,078.40 on the BSE.

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