Infosys net profit rises 10.3% in Q2

Aided by strong client addition and weak rupee, India's second largest IT services company, Infosys on Tuesday reported 10.3% rise in net profit at Rs 4,110 crore for the second quarter ended September 2018. It had reported Rs 3,726 crore for the corresponding quarter last year.

On sequential quarter basis, the company's net profit grew 13.8% compared with Rs 3,612 crore reported in the June quarter this year.

“Large deal wins at over $2 billion during the quarter demonstrate our increased client relevance and also give us better growth visibility for the near-term,” said Salil Parekh, CEO and MD of Infosys.

The company has also declared an interim dividend of Rs 7 per share.

In April, this year, the company had identified an amount of up to Rs 10,400 crore to be paid out to shareholders for the financial year 2019.

According to analysts, the jump in the revenues of the IT services companies is being propelled by stronger dollar. Among the Tier-I IT services companies, Infosys has the highest contribution coming from its US geography, followed by HCL.

The company has retained its constant currency guidance at 6%-8%.

On the geographical front, North America (60.3%) has been the biggest contributor to the company’s revenues in the quarter, followed by Europe (24%), and India (2.5%).

The company also saw its Banking, Financial services and Insurance (BFSI) increase by 4.7% on sequential basis. BFSI contributed 32.2% to the company’s revenues.

The digital revenues of the company contributed 31% of the company’s Rs 20,600 crore revenues for the quarter.

The company has also managed to bring down its attrition level to 19.9% from an all-time high of 20.6% in the last quarter. As a result of it, the company saw its net addition in the headcount increase by 7,834 people to 2,17,739.

The company's employee benefit costs have also increased by 16.2% on a year-on-year basis to Rs 9,976 crore during the quarter.

Infosys shares ended the day's trading at Rs 696.40 per share on the BSE, showing a dip of 0.39% over the previous close.

“Our unwavering focus on strong financial performance on multiple fronts continued to deliver results during the quarter. Operating margins for the quarter as well as for the half year was at 23.7%, near the top end of our guidance band”, said M D Ranganath, CFO, Infosys.

Payout to Bansal

Infosys has decided not to appeal against the arbitration tribunal’s verdict of awarding the severance pay to its former CFO Rajiv Bansal.

“The company has received legal advice and will comply with the award and make the necessary payments,” the company said. On September 17, 2018, the Arbitration Tribunal of Justice RV Raveendran (retired) communicated the decision with regard to the dispute between Infosys and its former CFO Rajiv Bansal.

According to the verdict, the IT major had been ordered to pay the outstanding amount of Rs 12.17 crore, along with interest. The IT firm had agreed to pay Bansal a severance amount of Rs 17.38 crore or 24 months of salary, but the company suspended payments after he received Rs 5 crore as co-founder N R Narayana Murthy and others objected to the severance package as excessive.