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Infosys Q1 Results | Profit rises 2% QoQ to Rs 5,195 crore, firm raises FY22 constant currency revenue growth forecast to 14-16%

Consolidated revenue in rupee terms rose 6 percent quarter-on-quarter (QoQ) to Rs 27,896 crore for the quarter under review and the topline in dollar terms grew by 4.7 percent sequentially to $3,782 million.

July 15, 2021 / 09:11 AM IST
The digital business growth remained strong and was the key driver for topline, rising 9.7 percent sequentially to $2,040 million, but the core business was down 0.7 percent QoQ at $1,742 million.

The digital business growth remained strong and was the key driver for topline, rising 9.7 percent sequentially to $2,040 million, but the core business was down 0.7 percent QoQ at $1,742 million.

 
 
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Country's second-largest software services provider Infosys reported a consolidated net profit of Rs 5,195 crore for the quarter ended June 2021, thereby growing 2.3 percent sequentially. However, the company increased its full-year revenue growth forecast in constant currency terms to 14-16 percent from 12-14 percent earlier.

Further, it retained full year EBIT margin guidance at 22-24 percent.

Consolidated revenue in rupee terms rose 6 percent quarter-on-quarter (QoQ) to Rs 27,896 crore for the quarter under review and the topline in dollar terms grew by 4.7 percent sequentially to $3,782 million, beating CNBC-TV18 poll estimates which had pegged it at Rs 27,718 crore and $3,758 million, respectively. The revenue growth in constant currency was at 4.8 percent QoQ against expectations of 3.5 percent.

The year-on-year growth in dollar revenue stood at 21.2 percent and constant currency revenue at 16.9 percent in Q1FY22, with largely broadbased growth.

"Driven by the dedication of employees and the trust of clients, we grew at the fastest pace in Q1 in a decade, at 16.9 percent year-on-year and 4.8 percent quarter-on-quarter in constant currency," said Salil Parekh, CEO and MD at Infosys.

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He further said,"I am proud of employees, who as 'One Infosys' demonstrate resilience and commitment in delivering for clients. This

gives confidence to increase revenue growth guidance to 14-16 percent."

"We remain confident of delivering on the margin guidance, underpinned by our comprehensive cost optimization program, despite increasing cost headwinds arising largely from compensation review, talent acquisition and retention," said Nilanjan Roy, Chief Financial Officer.

The digital business growth remained strong and was the key driver for topline, rising 9.7 percent sequentially to $2,040 million, but the core business was down 0.7 percent QoQ at $1,742 million.

The total contribution of digital business to revenue increased to 53.9 percent as of June 2021, from 51.5 percent in March 2021.

The large deal flows remained strong with total contract value of $2.6 billion in Q1, said the company in its BSE filing on July 14.

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At the operating level, earnings before interest and tax (EBIT) increased 2.5 percent quarter-on-quarter to Rs 6,603 crore, but margin declined 80 bps to 23.7 percent in Q1FY22 (due to higher employee cost and subcontractor expenses), thereby missing CNBC-TV18 poll estimates that had pegged the figures at Rs 6,787 crore and 24.5 percent, respectively.

The company has added 2 clients in $100 million+ category, 12 clients in $10 million+ band, and 26 clients in $1 million+ category, taking total active clients list to 1,659 at the end of June quarter, against 1,626 clients in March 2021.

Infosys said the voluntary attrition in its IT services segment (last twelve months) stood at 13.9 percent in Q1FY22 increasing from 10.9 percent in March 2021.

"As the demand for digital talent explodes, rising attrition in the industry poses a near-term challenge. We plan to meet this demand by expanding hiring program of college graduates for FY 22 to around 35,000 globally," said Pravin Rao, Chief Operating Officer.

The company increased its employees’ strength to 2.67 lakh in June 2021, from 2.59 lakh in March 2021. Utilisation including trainees was up by 110 bps to 83.3 percent QoQ in June quarter.

"Given strong demand across the verticals, strong deal wins, healthy deal pipeline and normalization of economic activities, the company is well positioned to report industry-leading revenue growth among large peers in FY2022. We have buy rating on the stock," said Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas.

Infosys stock rallied 2.07 percent to close at Rs 1,576.90 on July 14. It shot up 26 percent in the current year 2021 so far.
Moneycontrol News
first published: Jul 14, 2021 04:21 pm

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