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Infosys eyes up to 14% growth in fiscal 2022, okays buy back
Infosys’s net profit for the March quarter rose 17.1% from a year ago to Rs.5,078 crore, missing the consensus estimate of Rs.5,210 crore in a Bloomberg survey.
Infosys Ltd expects annual revenue to grow 12-14% in constant-currency terms, indicating the country’s second-largest software services firm is confident that global clients will continue to embrace digital transformation projects even if the pandemic is contained.
The Bengaluru-based company announced a Rs.9,200 crore stock buyback at a maximum price of Rs.1,750 per share, a premium of 25% to Tuesday’s closing price. This would be the company’s third buyback in five years. “The buyback size is less than our and the Street’s expectations,” said Sanjeev Hota, head of research, Sharekhan by BNP Paribas.
Infosys’s net profit for the March quarter rose 17.1% from a year ago to Rs.5,078 crore, missing the consensus estimate of Rs.5,210 crore in a Bloomberg survey. Fiscal fourth-quarter revenue rose 13.1% to Rs.26,311 crore, driven by broad-based growth across sectors. Revenue rose 10.7% to ₹100,472 crore for the year ended March 31. Dollar revenue grew 13% from a year ago to $3.61 billion, helped by large deal wins worth $2.1 billion in the fourth quarter.
“Our intense focus on client relevance, growing our digital portfolio with differentiated capabilities like Infosys Cobalt, and empowering employees have helped us emerge as a preferred partner of choice. Our record large-deal wins stand testimony to the effectiveness of this approach,” said Salil Parekh, chief executive and managing director, Infosys.
Operating margin for the March quarter narrowed to 24.5% from 25.4% in the preceding three months because of wage hikes in January. Infosys expects its operating margin to be in the range of 22-24% in FY22. The next wage hike will be given in July.
Infosys’s digital revenues grew 34.4% annually in constant currency to $1.86 billion, accounting for 51.5% of total revenues for the March quarter. Parekh said Infosys continued to see strong demand for digital in cloud computing, cybersecurity and data analytics.
“Infosys has managed to navigate through the crisis and has been comparatively more competent than some Indian peers to convert the threat into an opportunity to drive digital growth. As organizations accelerate digital journeys, revenue may continue to remain under pressure for some time, but digital growth will help regain the situation fast over a period,” said DD Mishra, senior research director, Gartner.
Financial services and retail segments, which account for almost half of Infosys’s revenue, fared well. While revenue from financial services clients grew 15.6%, retail revenue grew 4.5% in constant-currency terms.
The attrition rate quickened to 15.2% from 10% in the previous quarter. The management has attributed the rise in attrition to increased demand for people. However, Infosys will continue to take various measures such as re-skilling and compensation benefits to retain talent, said UB Pravin Rao, chief operating officer, Infosys.
