JOIN USInfosys net profit rises 12% in Q2 at Rs 5,421 crore
IT services major Infosys on Wednesday delivered a strong second-quarter performance both in revenue and deal pipeline front, prompting the company to raise its revenue guidance further for the current financial year.
The company has raised its revenue guidance to 16.5 per cent-17.5 per cent for the current financial year from the earlier 14-16 per cent range. This is the third consecutive quarter of raising the growth guidance for the company, reflecting the growth momentum.
The Bengaluru-headquartered firm reported consolidated net profit at Rs 5,421 crore for the September quarter, a rise of 11.9 per cent a year earlier.
Infosys’ consolidated revenue, increased to Rs 29,602 crore for the second quarter, a rise of 20.5 per cent compared to the corresponding period last year.
Revenues in dollar terms were at $3.99 billion for the quarter, which was a growth of 6.3 per cent sequentially in constant currency terms. The growth was 19.4 per cent over the last year in CC terms.
"Our stellar performance and robust growth outlook continue to demonstrate our strategic focus and the strength of our digital offerings. As we witness a strong market opportunity with global enterprises rapidly accelerating their digital journeys, our sustained investments in expanding capabilities, including the differentiated cloud play, Infosys CobaltTM, has uniquely positioned us to continue serving our clients effectively, gain market share and emerge as the preferred cloud and digital transformation partner in the market.”, said Salil Parekh, CEO and MD.
“Given this continued momentum we have further increased our revenue growth guidance to 16.5-17.5 per cent”, he added. However, its operating margin guidance of 22-24 per cent remained unchanged for the whole fiscal.
Revenues from digital business contributed 56.1 per cent to total revenues and were up 42.4 per centon a YoY basis.
Capital allocation
The company has completed the open market share buyback on September 8 at an average price of Rs 1,649 per share (compared to the maximum Buyback Price of Rs 1,750 per share). Consequently, the share capital of the company has been reduced by 1.31 per cent. With this, the company has returned around 82 per cent of the free cash flow for FY20 and FY21 through dividends and buyback.
The board of directors has announced an interim dividend of Rs 15 per share for FY22.
Large deals
Infosys continued to see momentum in the large deal space with its total contract value (TCV) at $2.15 billion in Q2. “Our pipeline looks strong with our strong digital and cloud capabilities. Such a robust deal pipeline gives us the confidence to raise our revenue guidance,” said Parekh.
The operating margin of the company stood at 23.6 per cent, down 10 basis points from the last quarter. “Our operating margins for Q2 were resilient; the impact of enhanced employee value proposition initiatives was offset by strong operating parameters, cost optimisation and operating leverage,” said Nilanjan Roy, Chief Financial Officer of Infosys.
However, the company continued to see high employee attrition as it reported attrition of 20.1 per cent, which was 620 basis points higher than the last quarter.
“Attrition rate reflects the high demand for talent in the market. This situation is likely to continue for two more quarters. We have introduced skill-based incentives, promotions, and many employee-engagement initiatives to retain talent,” said Pravin Rao, Chief Operating Officer at Infosys. “We have expanded our campus hiring programme and plan to hire 45,000 fresh graduates this fiscal year,” he added.
Pravin Rao to retire
Meanwhile, the COO of the company Pravin Rao will retire in December this year and the company will announce the new operating structure in the coming weeks. “We will announce the future growth structure in coming weeks,” Parekh said.
With regard to the smooth operations of the new Income Tax portal, Parekh said the new portal is making steady progress and around 2-3 lakh returns are being filed every day.
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