Salil S. Parekh Chief Executive Officer and Managing Director, Pravin Rao Chief Operating Officer and Ranganath D. Mavinakere Executive Vice President and Chief Financial Officer addressed the call.

Highlights of the call:

In June 2018 quarter sales were Rs 19128 crore, up 12.0% yoy and 5.8% qoq.

In June 2018 quarter revenues grew 6.0% in constant currency terms on yoy basis.In June 2018 quarter revenues grew sequentially by 2.3% in constant currency terms.

Net profit stood at Rs 3612 core, including impact of Rs 270 crore on account of reduction in the fair value of assets held for sale. It grew 3.7 yoy but fell 2.1% qoq.

It declared 1:1 bonus issue of equity shares and 1:1 stock dividend of American Depositary Shares.

The management had broad-based financial performance on multiple fronts-RoE crossed 25%, Free cash flow was up 32% qoq and OPM were at the upper quartile of its margin guidance.

The company plans to return 70% of the free cash flows to shareholders. Additionally, over and above that, another $2 billion will be distributed to the shareholders of which $400 million was already returned through a buyback in June. The management did not specify the manner and timing of the plan.

The strong revenue and margin performance shows that its dual emphasis on Agile Digital and AI - driven Core services is resonating with clients.

OPM fell due to wage hikes for 85% of employees which impacted by a negative 100 bps, increase in sub-contractor expenses and investments in SG&A both of which accounted for a negative 140 bps. OPM was positively impacted by cross-currency tailwind which impacted by a positive 100 bps and improvement in operational efficiencies by a positive 40bps.

Wage hikes to 85% of its employees were around 6-8% in India and 1-2% for its onsite employees.

Balance 15% employees will get wage hikes starting July'18, which will hit Q2 margins to some extent.

With its Agile Digital business growing sequentially at 8% in constant currency and increase in large deal wins to over US$ 1 billion, the management sees good traction in the market.

The company will continue to make strategic investments to leverage the opportunities in Digital.

Its relentless focus on operational efficiencies continued during the quarter.

The company managed to add four $100 million clients to take it to 24 on a sequential basis.

Large deal wins crossed $1 billion, of which over 40% was from Financial Services.

Infosys won 8 large deal wins during the quarter, of which 1 was in Americas and rest in Europe and Australia.

Among the verticals, 2 large deal wins were in Financial Services and rest were in Retail, Travel, Manufacturing and Hi-Tech verticals.

Around 47% of the total large deal TCV has come from net new deals and 40% deal wins were in Financial Services-both of them are in North America-.

On the uptick in large deal wins, Infosys stated that it is trying to improving deal originations by increasing engagements with deal advisors, tapping best talent within Infosys and incentivizing people to increase large deal wins. However, such deal wins are competitive at the start and the margin profile of such deals improves gradually over time with the help of Automation and AI.

Utilization excluding trainees reached an all-time high of 85.7%.

Planned investments will be gradual in FY19.

In June 2018 quarter, on re-measurement, including consideration of progress in negotiations on offers from prospective buyers for Panaya, the company has recorded a reduction in the fair value of Disposal Group held for sale amounting to Rs 270 crore in respect of Panaya. Consequently, profit for June 2018 quarter decreased by Rs 270 crore.

Digital revenues at $803 million accounted for 28.4% of total revenues. It saw sequential growth of 8.0% and yoy growth of 25.6% in constant currency terms.

It is seeing traction in Cloud, Data Analytics, IOT and Customer Experience areas with the help of its recent acquisition in digital area.

Cost reduction measures and in-sourcing in some large US Financial Services clients has led to subdued BFSI performance over the recent past due to a large base and high client concentration.

Increased investments in sales, reskilling, localization and digital is the factor behind retention of margin guidance.

While it's new strategy is resonating well with clients and employees (reskilling and localization), it still has challenges in its consulting business which is seeing weak margins and its China business which need much more focus.

Momentum in Regional Banks, Insurance and Europe continues to be strong.

Spends in the US are starting to improve.

While demand in Insurance has been on the core transformation side, demand in BFS is more of Digital and Blockchain led transformations. It expects growth in this vertical to happen in second half of FY 2019 due to weakness in one of the European clients.

For Telecom, this sector is facing headwinds due to increasing competition for its clients, which is leading to both topline and bottomline stress for clients. However, traction prevails in Digital and Network Transformations.

Retail posted strong growth in Q1, led by ramp-up of past deals and continued momentum.

While spends by its CPG clients are increasing to stay relevant (against the likes of Amazon and Facebook), challenges in CPG still persist, which forces it to remain cautiously optimistic on this vertical.

Going ahead, revenue guidance for 2018-19 in constant currency stood at 6-8% and USD terms stood at 7-9%. It expects a gradual uptick in margins in the coming quarters and remains confident of remaining within its 22-24% OPM band for FY19.

With the increase in Digital contribution which has relatively higher gross margin business, improvement in productivity of FP projects and onsite pyramid rationalization, margins are expected to remain in the guided range despite planned investments.

The company had voluntarily delisted its American Depository Shares from Euronext Paris and London on July 5. Its ADS were removed from Euroclear France on July 10 due to low average daily trading volume.

The company had 209905 number of employees as of June-end as against 204107 as of March 31. The figure was at 198553 in the same quarter last year.

Attrition on consolidated basis jumped to 23% during the quarter against 19.50% in the preceding quarter. Some of the attrition is seasonal. The company has identified some specific interventions to bring attrition down.

Onsite mix decreased further in this quarter and now stands at lowest in last 14 quarters. Onsite employee cost decreased to 37.9% against 38.3% qoq.

Growth in India declined by 4.1%, while that in the rest of the world rose 5.3%.

It will continue to invest in digital services ranging from big data analytics to artificial intelligence that deliver higher margins so that it can counter lower spending and a move to automation by its clients.

The company sees good traction starting to come in the banking and insurance space, and especially in insurance activity.

The outlook of the financial services vertical remains positive and it sees it as the foundation of driving the business.