Even if the pandemic is contained, Infosys Ltd expects annual revenue to rise 12-14 percent in constant currency terms, suggesting that the country’s second-largest software services firm is optimistic that global clients will continue to accept digital transformation projects.
The Bengaluru-based firm declared a stock buyback worth Rs.9,200 crore at a maximum price of Rs.1,750 per share, a 25 percent premium over Tuesday’s closing price. This will be the third buyback in the last five years for the firm. Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “The buyback scale is less than our and the Street’s estimates.”
In the March quarter, Infosys’ net profit increased 17.1 percent year over year to Rs.5,078 crore, falling short of the Bloomberg consensus estimate of Rs.5,210 crore. Revenue increased 13.1 percent to Rs.26,311 crore in the fourth quarter of the fiscal year, owing to broad-based growth across all sectors. For the year ended March 31, revenue increased 10.7 percent to Rs. 100,472 crores.
“Our laser-like emphasis on client relevance, the expansion of our digital portfolio with differentiated capabilities like Infosys Cobalt, and the empowerment of our employees have all contributed to us being a preferred partner of choice. Our record-breaking large-deal wins attest to the success of this strategy,” said Salil Parekh, Infosys’ chief executive officer, and managing director.
As of wage hikes in January, the operating margin for the March quarter fell to 24.5 percent from 25.4 percent, in the previous three months. In the FY22, Infosys expects an operating margin of 22-24 percent. The next pay raise will take place in July.
In constant currency, Infosys’ digital revenues increased 34.4 percent to $1.86 billion in the March quarter, accounting for 51.5 percent of total revenues. Infosys is continuing to see strong demand for digital in cloud computing, cybersecurity, and data analytics, according to Parekh.
“Infosys has navigated the crisis and has proven to be more capable than some of its Indian competitors in transforming the challenge into an opportunity to drive digital development. Revenue can remain under pressure for a while as companies intensify their digital transformations, but digital growth will help them quickly recover.”Gartner’s senior research officer, DD Mishra, said.
The financial services and retail segments performed well, accounting for nearly half of Infosys’ revenue. In constant-currency terms, revenue from financial services clients increased by 15.6 percent, while retail revenue increased by 4.5 percent.
The attrition rate increased to 15.2 percent in the third quarter, up from 10 percent the previous quarter. The increased demand for people has been blamed by management for the rise in attrition. However, Infosys will continue to take steps to retain talent, such as re-skilling and salary packages, according to UB Pravin Rao, Infosys’ chief operating officer.
