Infosys, India’s second-largest software services company, on Friday reported 23.71% year-on-year (y-o-y) rise in its net profit for the quarter ended December 2019 (Q3).

The Bengaluru-based IT major’s profit during the quarter grew to Rs 4,466 crore from Rs 3,610 crore a year ago. On quarter-on-quarter (q-o-q), the company’s net profit rose 10.62%. During the September quarter, net profit was Rs 4,037 crore.

The company’s operating margin also improved to 21.9%, a 20-basis point growth over the preceding quarter.

“Q3 results further underscore that we remain steadfast in our journey of sustained client relevance and deepening engagement with them, as they partner with us in navigating their next in the digital transformation era”, said Salil Parekh, CEO and MD of Infosys. “For us, this has translated into double-digit growth year-to-date, leading to an increase in revenue guidance, accompanied by expanding operating margins.”

Revenue from operations during the quarter under review stood at Rs 23,092 crore, up 7.9% y-o-y and 2% q-o-q. Interestingly, the company’s digital business accounted for 40.6% of total revenue and registered a growth of 40.8% y-o-y.

Infosys has increased its FY20 revenue guidance to 10%-10.5% in constant currency terms. IT companies typically use the constant currency method to eliminate the effects of exchange rate fluctuations while calculating financial results.

“Overall performance during the quarter was satisfactory on multiple counts—broad-based growth, steady increase in client metrics, and healthy large deal wins”, said chief operating officer Pravin Rao. “Large deal wins continue to be robust with the growth of 56% so far this year. We had a further reduction in attrition, demonstrating the results of our continued efforts towards strengthening employee engagement and value proposition.”

According to chief financial officer Nilanjan Roy, the company achieved higher operating margins that were “driven by relentless cost optimisation and operating leverage.”

“Cash generation was extremely strong with cumulative free cash flow crossing $1.5 billion. Return on equity increased further to 25.9%, driven by margin expansion and increased shareholder payouts,” he added.

On Friday, shares of Infosys on the BSE closed 1.47% higher at Rs 738.25, while the benchmark Sensex ended the day up 0.36% at 41,599.72 points.

Furthermore, the company said that its audit committee of the Board of Directors had determined that all the allegations against its CEO and CFO by anonymous whistleblowers “are substantially without merit.” Numerous anonymous whistleblowers’ complaints had accused Parekh and Roy of procedural lapses and aggressive accounting practices, among other things.

The audit committee conducted an investigation with the assistance of independent legal counsel Shardul Amarchand Mangaldas & Co. and PricewaterhouseCoopers Private Ltd. The investigation team conducted a detailed and extensive analysis which included: 128 interviews with 77 persons, including relevant company personnel concerned with or mentioned in the allegations; identifying 46 custodians for collection of relevant documents and electronic data; reviewing over 210,000 documents from electronic sources and imaged devices, with over 8 terabytes of electronic data being processed.

“I am pleased that after a rigorous investigation, the audit committee has found no wrongdoing by the company or its executives,” said Nandan Nilekani, chairman of Infosys.

“CEO Salil Parekh and CFO Nilanjan Roy are strong custodians of the company’s proud heritage. Salil has played a key role in reinvigorating the organisation and driving momentum and the board is confident that he will continue to execute on the company’s new strategic direction successfully,” added Nilekani.

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