Infosys, the country's second-largest IT services company by market capitalisation, has reported consolidated profit at Rs 5,421 crore in the quarter ended September 2021 quarter.
The net profit marks an increase of 11.9 percent year-on-year and 4.4 percent compared to Rs 5,195 crore in the June quarter, on the back of strong revenue contribution from Daimler deal, higher adoption of digital transformation by clients, broad-based growth across verticals and geographies, and strong seasonality. This was despite a reduction in other income which declined significantly by 15.8% sequentially and by 8% YOY.
(It may be noted that Daimler and Infosys had announced a long-term strategic partnership for a technology-driven IT infrastructure transformation in Dec’2020. Through this partnership, Daimler AG will transform its IT operating model and infrastructure landscape across workplace services, service desk, data center, networks, and SAP Basis together with Infosys. The total deal amount was about $3.2 billion.)
Its consolidated revenue, increased to Rs 29,602 crore during the period as compared to Rs 27,896 crore in the previous quarter, a sequential growth of 6.1% and a growth of 20.5% compared with the corresponding period last year when the company had reported revenue of Rs 24,570 crore.
Growth was broad-based across geographies and segments with the largest geography, North America growing at 23.1% and the largest segment, Financial Services growing at 20.5%, YOY in constant currency.
"Our stellar performance and robust growth outlook continue to demonstrate our strategic focus and the strength of our digital offerings. As we witness a strong market opportunity with global enterprises rapidly accelerating their digital journeys, our sustained investments in expanding capabilities” said the CEO of the company, Salil Parikh.
Revenue from digital business contributed 56.1% to total revenues and was up 42.4% on a YOY basis.
Due to the supply side issues faced by the company and the industry as a whole, the company had to incur more to retain the talent which was accompanied by wage hikes across lower and middle levels. The employee cost increased by 3.4% sequentially and by 17.5% on a YOY basis. The hikes given by the company, however, were not enough to control the attrition which jumped to 20.1% from 13.1% sequentially.
The supply-side issue also resulted in the increase in the cost of sub-contractors which saw a spike of 24.4% sequentially and a huge jump of 87% on a YOY basis.
Operating margins were down due to supply-side headwinds and for the quarter stood at 23.6% which was 10 bps lower than the previous quarter and was down 180 bps on a YOY basis.
Commenting on the margins, Nilanjan Roy, Chief Financial Officer, said “Our operating margins for Q2 were resilient; the impact of enhanced employee value proposition initiatives was offset by strong operating parameters, cost optimization, and operating leverage.”
The net margin for the quarter is 18.3% which is down by 30 bps sequentially and 140 bps YOY.
The company signed large deals to the tune of $2.15 billion which complements the already very healthy order book and pipeline in digital transformation space for the company.
The company has also declared an interim dividend of Rs. 15/share.
Parekh said, given the continued momentum we have further increased our revenue growth guidance to 16.5%-17.5% from 14%-16% given earlier.
The margin guidance, however, remains unchanged at 22%-24%.
The stock price has registered a 23.71 percent return in the current financial year FY22 and gained 7 percent from July till today.