Infosys revenue contribution from BFSI, telecom dipped in fiscal 2014

Infosys revenue contribution in fiscal 2014 from banking, finance and insurance (BFSI) and energy, utilities and telecom slipped as compared with fiscal 2013.

These two sectors are the largest and fourth largest revenue contributors to Infosys.

Dipen Shah, head- Private Client Group Research, Kotak Securities, said: “Infosys’ results and guidance were largely in line with estimates. The 7-9 percent growth in FY15 indicates about 2.5 percent CQGR growth in FY15, which is encouraging. While a few verticals and geographies have seen a decline q-o-q, the decline was in line with earlier management commentary.”

Infosys said its revenue for the 2014 fiscal grew 11.5 percent to $8,249 million while India’s second-largest IT firm’s net profit rose 1.5 percent to $1,751 million.

Most of the industry verticals supported Infosys in its fiscal 2014 growth. BFSI continues to be the single largest revenue contributor to Infosys.

For instance, the revenue contribution of banking, finance and insurance (BFSI) sector came down to 33.6 percent in fiscal 2014 from 33.9 percent in fiscal 2013.

Out of this, BFS contributed 27.2 percent in FY 2014 against 27.1 percent in FY 2013, insurance 6.4 percent (6.8 percent).

Manufacturing contribution to Infosys revenue increased to 22.9 percent from 22 percent.

Retail and life science also noticed increase in contribution to 24.3 percent from 23.9 percent.

Out of this, retail and CPG contributed 15.8 percent against 16.3 percent.

Transport and logistics contribution remained flat at 1.7 percent.

Life sciences contribution enhanced to 4.7 percent from 4.3 percent, Infosys said on Tuesday.

Infosys also noticed its healthcare portfolio income contribution growing to 2.1 percent from 1.6 percent.

Energy, utilities and telecom was the third largest contributor of Infosys revenue in fiscal 2014. Its contribution declined to 19.2 percent from 20.2 percent.

Out of this, energy contribution was 5.1 percent against 5.2 percent.

Telecom took a beating as revenue contribution declined to 8.3 percent from 9.7 percent. Other areas contributed 5.8 percent against 5.3 percent.

“We believe that, client – specific and vertical-specific issues may likely impact the near term results. However, we believe that, the initiatives being taken by the management should lead to higher growth and stable margins in 2HFY15 and FY16. To that extent, we maintain our positive view on the stock with a medium-to-long term perspective,” Shah added.

Infosys revenue analysis for fiscal 2014

Meanwhile, Infosys today said it expects its dollar revenue to grow 7 percent-9 percent in the 2015 financial year.

Infosys and its subsidiaries added 50 clients during the quarter and 238 during the year. Its clients include Chinese-owned Swedish automaker Volvo Car, taking its total tally to 890. At the end of the previous quarter, Infosys had a total of 888 clients.

Reuters reported retaining staff is a challenge for all Indian IT services firms, which rely on armies of young, mainly low-paid workers to remain competitive in an industry worth more than $100 billion.

Infosys, however, appears to be having a particularly difficult time with staff as it undergoes a restructuring aimed at lifting growth to match rivals including sector leader Tata ConsultancyServices and third-ranked Wipro.

The attrition rate, currently bigger than its two rivals, is the highest ever seen.

It made a gross addition of 10,997 employees during the quarter and 39,985 during the year. Infosys and its subsidiaries have 160,405 employees as on March 31.

The Bangalore-based software services firm has raised salaries of its employees in the country by 6-7 percent and by 1-2 percent for onsite workers, effective April 1.

“This is the second time we are giving compensation increase over the last nine months. Nine months back, we had given a compensation increase of 6-8 percent offshore,” said Infosys CEO and MD S D Shibulal.

Some 18.7 percent of overall staff left in the March quarter, the company said, up from 16.3 percent in the same year-ago quarter and in line with the level of staff exits in the previous quarter. Shibulal said the company was trying to retain staff through pay increases, promotions and other incentives.

Baburajan K
editor@infotechlead.com

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