Infosys Q2 profit up 11.9%; raises revenue forecast for FY22

Infosys Ltd, India's second-largest IT services company, on Wednesday reported better-than-expected 12 per cent rise in its second-quarter net profit on more contracts from global businesses, a reason that also led to it raising its annual revenue outlook.

Net profit in July-September at Rs 5,421 crore, or Rs 12.88 a share, was 11.9 per cent higher than Rs 4,845 crore (or Rs 11.42 a share) net profit in the same period a year back.

The net profit, which is 4.4 per cent higher than the preceding June quarter, came on the back of broad-based growth across verticals and geographies, strong revenue contribution from the Daimler deal, and higher adoption of digital transformation by clients.

The firm raised its forecast for annual revenue growth to 16.5 per cent to 17.5 per cent in the fiscal year to March 2022, from 14 per cent to 16 per cent growth predicted in July.

This is on the back of expectations of winning more contracts from global businesses expanding their digital offerings during the COVID-19 pandemic.

"We feel that the deal pipeline looks strong today and that has given us the confidence, in addition to what we have done in the past, to increase the guidance," Infosys CEO and MD Salil Parekh said at a media briefing that was a combination of physical and virtual modes.

Indian IT services sector has seen big gains such as cloud computing, digital payments infrastructure and cyber security since the onset of the pandemic.

Infosys kept margin guidance unchanged at 22-24 per cent.

The company announced an interim dividend of Rs 15 per share for the fiscal 2021-22 (FY22).

Its consolidated revenue from operations rose by 20.5 per cent to Rs 29,602 crore.

The software major said it has expanded its fresher hiring programme to 45,000 for the year as it sees strong demand for its services.

This also comes at a time when its attrition has spiked, amidst an unprecedented war for technology talent in India.

The Bengaluru-based firm said major deal signings stood at $2.15 billion for the quarter ended September 30, compared to $2.6 billion in the June quarter and $3.15 billion a year ago.

Growth was broad-based across geographies and segments with the largest geography, North America growing at 23.1 per cent and the largest segment, Financial Services growing at 20.5 per cent year on year in constant currency.

Infosys -- which has drawn flak over glitches in the new Income Tax portal -- asserted it is seeing "a steady progress" on the system and that the taxpayers concerns are being progressively addressed.

"As of yesterday we had over 1.9 crore returns that have been filed using the new system.

"Today the income tax return forms one through seven, are all functional. Most of the statutory or several other statutory forms are available on the system," Parekh said responding to a question.

Over the past month, the Income Tax portal has been further bolstered, he said and added that the system has seen steady increase in usage over the last few weeks.

"Over 18 crore logins have been observed on the portal and approximately 3.8 crore unique users have successfully completed various transactions.

"The system is seeing somewhere between two and three lakh returns being filed each day," Parekh said.

During Q2, Infosys' digital revenues were at 56.1 per cent of total revenues, and the company posted year-on-year constant currency growth of 42.4 per cent in this space.

With over 86 per cent of Infoscions in India having received at least one dose of 'vaccination', the company is rolling up its sleeves to embrace the hybrid work model.

"We have equipped employees with the resources they need to be productive, cyber secure, stay connected, and maintain a work-life balance.

"Our talent strategy also factors in expanded hiring pools that include new communities and work locations," UB Pravin Rao, chief operating officer of the company said.

Incidentally, this will be Rao's last full quarter in the company before he retires and Infosys said it will announce a new structure before he steps down.

Photograph: Vivek Prakash/Reuters