Infosys delivers on revenue, deal wins, but will margins follow suit?

After Tata Consultancy Services Ltd reported a disappointing set of numbers for the June quarter, all eyes were on Infosys Ltd’s results to see if the entire industry is witnessing a drop in growth rates. But Infosys has bucked the trend, with a strong performance for the June quarter. Revenues increased 2.8% sequentially in constant currency terms. On a year-on-year basis, they are up 12.4%, better than the 11.7% growth in the March quarter. What’s more, Infosys has announced it will increase its cash return ratio to as high as 85% of free cash flow, from 70% earlier.

It’s little wonder Infosys shares were up about 8% in early trading on the New York Stock Exchange. To be sure, growth was propped up partly by the Stater N.V. acquisition, which added about 60 basis points to sequential growth.