Digital services propel Infosys’s net 3.7% higher

Digital services propel Infosys’s net 3.7% higher

Digital services propel Infosys’s net 3.7% higherRevenue rises 12%; financial services forms 40% of $1-bn wins; IT major retains annual guidance, announces 1:1 bonus

Infosys said on Friday net profit for the quarter ended June 30 rose 3.7% year-on-year to ₹3,612 crore, driven mainly by digital services.

Profit would have been higher but for a ₹270 crore impact on account of reduction in the fair value of assets held for the sale of Panaya. “Consequently, profit for the three months ended June 30…has decreased by ₹270 crore resulting in a decrease in basic earnings per equity share by ₹1.24,” Infosys said in a statement.

Digital at 28% of revenue

Revenue grew 12% to ₹19,128 crore in the first quarter.

Digital business, which accounted for $803 million or 28.4% of the total revenue, grew 25.6% year-on-year.

“The strong revenue and margin performance in this quarter show that our dual emphasis on agile digital and AI-driven core services is resonating with our clients,” said Salil Parekh, CEO & MD.

“With our agile digital business growing sequentially at 8% in constant currency and increase in our large deal wins to over $1 billion, we see good traction in the market,” Mr. Parekh said.

Financial services constituted 40% of the $1-billion large deal wins. Utilisation rates were at an “all-time” high of 85.7%, Infosys said. Earnings per share grew 9.1% on a year-on-year basis.

The NYSE-listed company retained its full-year revenue growth guidance in constant currency at between 6% and 8%. Annual operating margin guidance was also retained at 22% to 24%.

“The results have been largely ‘no event’ as guidance was retained despite slight beat on the operating performance,” Emkay Global Financial Services said.

On Monday, larger rival Tata Consultancy Services (TCS) posted a 23% jump in first-quarter profit at ₹7,340 crore, as revenue increased 16% to 34,261 crore.

Separately, Bengaluru-based Infosys on Friday also announced a bonus issue of one equity share for every share held and a stock dividend of one American Depositary Share (ADS) for every ADS held, as on a record date to be determined. “Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder would remain unchanged,” according to a BSE filing.

“The board approved and recommended the issue of bonus shares to celebrate the 25th year of the company’s public listing in India and to further increase the liquidity of its shares. The bonus issue of equity shares and ADSs will be subject to approval by the shareholders, and any other applicable statutory and regulatory approvals.”

$100-mn clients increase

Infosys’s emphasis on client relationships resulted in “strong client metrics” including an increase in the number of $100 million-plus clients to 24, said chief operating officer U.B. Pravin Rao.

“We had broad-based financial performance on multiple fronts — return on equity crossed 25%, free cash flow was up 32% quarter-on-quarter and operating margins were at the upper quartile of our margin guidance,” said CFO M.D. Ranganath.

“While we continue to make strategic investments to leverage the opportunities in digital, our relentless focus on operational efficiencies continued,” he added.

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