Infy results: Things to look out for

Bengaluru-based IT major Infosys will be announcing its third-quarter results later today, amid global headwinds and slowdown in the US economy.

Here are the five things to watch out for in the results:

Shareholder bonanza

The company is set to announce a bonanza for its shareholder, which is likely to be worth Rs 10,400 crore. The perks doled out to the shareholders can be in form of buy-back of the shares or special dividend.

In June 2018, the company had announced a special dividend of Rs 10 per share ($0.15 per ADR) resulting in a payout of approximately Rs 2,600 crore (approximately $400 million).

Last year, Infosys bought back 113,043,478 equity shares at a price of Rs 1,150 per share for an aggregate amount of Rs 13,000 crore.

The company’s December 2017 share buyback programme saw participation from LIC, Singapore government, Sudha Gopalakrishnan (wife of co-founder S Gopalakrishnan) and Rohan Murty (son of co-founder NR Narayana Murthy) among others. The company’s stocks are expected to be upbeat in build-up to the announcement.


Attrition
The company has been marred that higher than usual attrition rates of late – and has taken many measures to control it. It did yield some results last quarter, as attrition came down by 70 basis points in the second quarter to 19.9%, as against 20.6% during the first quarter.

However, during the second quarter, 11,887 employees left the company, many of whom were the top performers. Attrition level is one thing that everyone would watch out for in the IT majors results.

Management changes
Infosys in the past two years has seen lot of exits by the top executive. Among the people who quit, many were key managerial people for the Bengaluru-based IT major, and many were associated with the company for decades together. It would be interesting to see whether there would be any more rejig in the company.

Impact of rupee volatility and global slowdown:
Rupee continued to be volatile in the 3rd quarter of the current financial year. It touched an all-time low during the first month of the bygone quarter, against US dollar. However, as the quarter went by, the rupee continued to be volatile. In the last quarter, 60.3% Infosys’ revenue came in US dollar terms.

So, the analysts and shareholders need to watch out for the impact of rupee on the company’s revenues in this quarter. Also as a slowdown has plagued the US economy, and Theresa May still not being able to get a deal for Britain on Brexit, it is interesting to know how these factors will impact company’s top-line. In the scenario, management commentary on this front will also hold a lot of significance.

Digital revenues:
The tier 1 IT companies in India have prioritised their digital businesses. And under Salil Parekh’s leadership, the digital business is the core to all the business strategies of Infosys going forwars. Digital contributed 31.0% of the company’s revenues in the second quarter of the current financial year, with sequential growth of 12.7%. The company’s progress in this space would be keenly watched out for, according to the analysts.