Infosys Q1 profit rises 23% to Rs 5,195 crore; company raises revenue outlook for FY22

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Updated: July 14, 2021 8:55 PM

Its revenue from operations grew 17.8% to Rs 27,896 crore in the first quarter of FY22 from Rs 23,665 crore in the year-ago period.

Infosys has raised its revenue guidance for FY22 to 14-16 per cent from the previous outlook of 12-14 per cent.

IT services major Infosys on Wednesday posted nearly 23 per cent rise in net profit for the June quarter at Rs 5,195 crore and raised its revenue growth outlook for the full fiscal to 14-16 per cent buoyed by its robust deal pipeline and “strong” Q1 performance.

Infosys, which has drawn flak over glitches in the new Income Tax portal, said this project is the biggest priority for the company right now and that it is working “expeditiously” to resolve the issues.

The Bengaluru-based company posted a 22.7 per cent rise in net profit at Rs 5,195 crore for the June 2021 quarter as against Rs 4,233 crore in the year-ago period. Its revenue from operations grew 17.8 per cent to Rs 27,896 crore in the first quarter of FY22 from Rs 23,665 crore in the year-ago period.

Infosys upped its revenue guidance for FY22 to 14-16 per cent from the previous outlook of 12-14 per cent, and said that its confidence stemmed from “strong” Q1 growth, good order wins and robust deal pipeline.

In the June quarter, Infosys’ large deal flows remained strong with total contract value (TCV) of USD 2.6 billion. “…we grew at the fastest pace in Q1 in a decade, at 16.9 per cent year-on-year and 4.8 per cent quarter-on-quarter in constant currency. We remain comfortable with our ability to support our clients in their digital transformation journey with a strong start to the financial year,” Infosys CEO and Managing Director Salil Parekh said.

This along with a strong deal pipeline, gives the company confidence to increase revenue growth guidance to 14-16 per cent, he added.

Infosys’ revenues in constant currency terms grew by 16.9 per cent y-o-y in the June 2021 quarter. Its basic EPS (earnings per share) grew 22.6 per cent y-o-y to Rs 12.24.

Infosys announced its numbers after the close of market hours. Shares of Infosys closed at Rs 1,576.90 apiece, up 2.07 per cent from the previous close on BSE.

Last week, larger rival Tata Consultancy Services had posted 18.5 per cent growth in consolidated revenues to Rs 45,411 crore in the June 2021 quarter. Wipro and HCL Technologies are slated to report their financial performance on July 15 and July 19, respectively.

Parekh said there is good traction across several sectors, and there is a strong deal pipeline in sectors like financial services, retail, manufacturing and life sciences. Infosys’ digital revenues stood at 53.9 per cent of total revenues, a year-on-year constant currency growth of 42.1 per cent.

Infosys Chief Operating Officer Pravin Rao said rising attrition in the industry poses a near-term challenge as the demand for digital talent explodes.

“We plan to meet this demand by expanding our hiring programme of college graduates for FY22 to about 35,000 globally,” he added.

The company is going all out to focus on employee retention strategies. “…we already had the one compensation increase in January, and the second one is effective July, we will be rolling it out. We have increased the number of promotions, there is a significant focus on retention,” Rao pointed out.

Infosys’ total headcount stood at 2,67,953 people at the end of June 2021 quarter, while its voluntary attrition rate was at 13.9 per cent.
Infosys Chief Financial Officer Nilanjan Roy said the company remains confident of delivering on the margin guidance, underpinned by its comprehensive cost optimisation programme, despite increasing cost headwinds arising largely from compensation review, talent acquisition and retention.

Infosys, which had started its share buyback programme through open market route from June 25, 2021, said it has bought back 9.8 million shares worth Rs 1,542 crore till date at an average price of approximately Rs 1,569 per share (compared to maximum Buyback Price of Rs 1,750 per share).

Infosys Board has also approved the integration of the business of Brilliant Basics group comprising Brilliant Basics holding Ltd and its subsidiary Brilliant Basics Limited with Infosys Limited.

The integration will be made through an agreement with Brilliant Basics Ltd to transfer its business, including all assets and liabilities to Infosys Ltd.

On a question about glitches in the new I-T portal, Parekh said the company is working expeditiously to make sure that all of the features are being delivered.

“Several of the functionalities are already working, there is a large number of returns that are being filed, statute forms that are being uploaded, e-proceedings that are carrying on, and there is work done in making sure that all of the stability and the performance is coming together,” he added.

Parekh noted that the company is working jointly and collaboratively with all the stakeholders and exuded confidence that the outstanding issues will be resolved.

On the issue of insider trading that involved two Infosys employees, Parekh clarified that the company itself is not a party to the proceedings of the matter.

“This is something where the company is not a focus of any of the activity from SEBI. We are fully supporting and providing data and information…making sure we are in full compliance with all of the guidelines and regulations,” he said.

In June, Sebi had banned eight entities, including two employees of Infosys, for indulging in insider trading activities in the shares of the company.

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