Infosys net up 3.7% at 3,612 cr in Q1

The revaluation of subsidiary company Panaya has hit the profits of IT major Infosys, despite its revenues growing by 12% during the first quarter ended June 2018.

The company has clocked a net profit of Rs 3,612 crore for the quarter ended June 30, 2018, up 3.7% year-on-year, compared with Rs 3,483 crore for the corresponding quarter last fiscal.

The company had clocked net profit of Rs 3,690 crore for the last quarter of the financial year ended March 31, 2018.

While the revenues of the company jumped by 12% to Rs 19,128 crore, from Rs 17,078 crore.

“During the three months ended June 30, 2018, on remeasurement, 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,” the company said in a statement.

Consequently, the profit for the three months ended June 30, 2018 for the company has decreased by Rs 270 crore resulting in a decrease in basic earnings per equity share by Rs 1.24 for the quarter ended June 30, 2018.

Revenues from digital business constituted 28.4% of its total revenues, pegged at $803 million.

“The strong revenue and margin performance in this quarter shows that our dual emphasis on Agile Digital and AI-driven Core services is resonating with our clients,” Salil S Parekh, CEO and MD, Infosys said, for whom digital is the core competency in the new roadmap for IT major.

In March 2018 quarter, digital amounted to 26.8% of the company’s revenues.

On the geographical front, North America (60%) has been the biggest contributor to the company’s revenues in the quarter, followed by Europe (24.3%), and India (2.6%).

Based on the client industry vertical, Banking and Financial Services, Insurance (BFSI) was the largest contributor to the revenues with a contribution of 31.8%, followed by Retail (16.6%) during the quarter.

The earnings per share of the company stood at Rs 16.60, as against Rs 15.23 in the corresponding quarter last fiscal.

“We had broad-based financial performance on multiple fronts - RoE crossed 25%, Free cash flow was up 32% quarter on quarter and operating margins were at the upper quartile of our margin guidance,” M D Ranganath, company’s CFO said.

The company has also acquired 70 new clients during the first quarter, taking its total client base to 1,214, as against 1,162 in the previous quarter.

“Our emphasis on deepening client relationships resulted in strong client metrics including increase in the number of $100 million+ clients to 24”, said U B Pravin Rao, COO, Infosys said. “Utilisation excluding trainees reached an all-time high of 85.7%,” he added.

On the estimates front, the company has retained its revenue guidance at 6%-8% in constant currency.

Bonus shares

The Board in its meeting held on July 13, 2018 has considered, approved and recommended a bonus issue of one equity share for every equity share held and a stock dividend of one American Depositary Share (ADS) for every ADS held, as on a record date to be determined.

Meanwhile, the company’s board approved appointment of Michael Gibbs as director on its board for a period of three years, with immediate effect.

Voluntary de-listing

In line with the announcement made on June 11, 2018, Infosys has voluntarily delisted its American Depository Shares (ADSs) from Euronext Paris and London on July 5, 2018 and its ADS were removed from Euroclear France on July 10, 2018. The primary reason for voluntary delisting from Euronext Paris and London was the low average daily trading volume of Infosys ADSs on these exchanges, which was not commensurate with the related administrative expenses, the company said.

Infosys ADSs will continue to be listed on the NYSE under the symbol “INFY” and investors can continue to trade their ADSs on the New York Stock Exchange.