Infosys posts 17.5% fourth-quarter profit jump to Rs 5,076 crore

Infosys expects FY22 revenue to grow 12-14 per cent in constant currency

India’s second-largest IT services player Infosys on Wednesday reported Q4 performance in line with the market expectations on the back of strong momentum in the large deal space coupled with a robust performance in the financial services vertical.

The Bengaluru-headquartered firm posted a net profit of Rs 5,076 crore for the fourth quarter ended March, a rise of 17.5% over the same period last year. Its revenues rose 13.1% to Rs 26,311 crore during the quarter as compared to a year-ago period.

In dollar terms, revenues of the firm stood at $3.61 billion, a growth of 2% over the past quarter in constant currency term. Its larger peer Tata Consultancy Services posted a growth of 4.2% in constant currency term sequentially. Infosys had posted its best sequential growth of 5.3% in about nine years in Q3.

The firm also guided for robust growth in revenues in the range of 12-14% and operating margin in the 22-24% range for FY22.

For the whole fiscal, revenues of the IT major increased 10.7% to Rs 1,00,472 crore. Net profit rose 16.6% at Rs 19,351 crore. Revenues in dollar terms were at $13.56 billion, a growth of 5% in constant currency terms. As compared to this, TCS’ revenues in constant currency terms declined 0.8% to $22.17 billion for FY21.

Owing to wage hike and other expenses, Infosys saw its operating margins fall by 90 basis points quarter-on-quarter (Q-o-Q) at 24.5% in Q4. For the whole fiscal, margin was at 24.5%, which was at the higher end of its guided range of 24-24.5% for the last financial year. Its larger peer TCS posted an operating margin of 25.9% for FY21.

Despite posting an operating margin of 24.5%, the company lowers its margin guidance for FY22 and expects it to be in the range of 22-24%. Rising expenses, and higher wage cost were cited as the reasons for such margin guidance.

Despite a pandemic year, Infosys bagged one of the highest number of large deals in FY21. Its large deals for the fourth quarter stood at $2.1 billion, taking the number for the whole fiscal to $14.1 billion. The company said that 25 large deals were signed in Q4 with 52% being net new (coming for the first time).

During the fourth quarter, Infosys drew 51.5% of its revenues from digital, with the rest coming from legacy businesses.

“We have crossed a milestone of Rs 1,00,000 crore in revenue in FY21. Our record large deal wins stand testimony to the effectiveness of this approach. A strong momentum exiting FY21, alongside a focused strategy to accelerate client digital journeys, gives us confidence for a stronger FY22,” said Salil Parekh, CEO, and MD of Infosys.

It also performed well across most verticals. Its growth in the most important BFSI (banking, financial services, insurance) vertical stood at 15.6% over the last fiscal, which was one of the highest among all verticals. Similarly, its hi-tech vertical grew 15.5% YoY, while life sciences grew by 18.3%.

With the demand picking up, Infosys witnessed its employee attrition going up by 5.2% at 15.2% in Q4 of FY21 as compared to 10% reported in the previous quarter. “Attrition has picked up, largely reflecting a strong demand environment, but we remain confident of our employee engagement initiatives, vast talent pool, and training capabilities to ensure seamless execution,” said Pravin Rao, COO at Infosys. The company said it has rolled out salary hikes in January this year for its employees.

The company also added 10,307 employees on a net basis to take its total headcount to 259,619 by the end of March quarter. On the hiring front, the IT firm plans to add a similar or a greater number of employees during this financial year.