The December quarter performance of Infosys was a mixed bag. While revenue and profit growth was broadly on expected lines, the operating margin was below the Street’s expectations and there was no visible revival in the major verticals of financial services and retail, which together contributed 47% to the total revenue in the quarter.The favourable outcome of the internal audit committee regarding the whistle blower allegations will be a near-term positive for the stock. The audit committee assisted by an independent legal counsel has concluded that there was no evidence of financial impropriety or misconduct by the company’s executives.
While this would settle the doubts in the minds of investors for the time being, it would be prudent for them to know that the Securities Exchange Commission (SEC) in the US where the company’s depository receipts are listed, continues to investigate the matter. Infosys also faces class action lawsuits by stockholders in the US. In addition, Indian regulatory authorities have sought information from the company on the matter.