Infosys on Wednesday posted 20.5 per cent rise in September quarter net profit to Rs 4,845 crore, mainly helped by large deals, prompting the IT services major to raise its revenue growth forecast to 2-3 per cent for FY21.
Infosys, which had clocked a net profit of Rs 4,019 crore in the year-ago period, said its basic EPS (earnings per share) has increased 20.8 per cent year-on-year to Rs 11.42.
The Bengaluru-based company's revenues grew 8.5 per cent to Rs 24,570 crore in the quarter under review, from Rs 22,629 crore in the year-ago period.
Post its better-than-expected performance, Infosys revised its guidance upwards to 2-3 per cent growth for FY21 in constant currency terms from its previous outlook of up to 2 per cent growth.
"On the demand side, we see good demand and a good pipeline thanks to some of the recent wins that we have had over the past few quarters...and on the margin side, we have had very strong discipline managing the business," Infosys CEO and MD Salil Parekh said.
Infosys signed large deals worth US 3.15 billion in the quarter under review.
Its digital revenues during the quarter stood at USD 1,568 million (47.3 per cent of total revenues), clocking a y-o-y growth of 25.4 per cent in constant currency.
"Our second-quarter performance is a clear reflection of our ability to help clients on their digital transformation journeys. Our digital and cloud capabilities combined with intense client relevance are helping us achieve differentiated results in the market," Parekh said.
Infosys has also declared an interim dividend of Rs 12 per equity share.
Infosys CFO Nilanjan Roy said free cash flows grew significantly in the first half of the fiscal, driven by Infosys' consistent focus on liquidity and cash management.
"Consequently, we are increasing our interim dividend per share by 50 per cent to Rs 12," he added.
Efforts on cost optimisation and strengthening operational efficiencies were helped by certain cost deferrals that led to 270 basis point sequential improvement in operating margin, he said.
Infosys will roll out salary hikes and promotions for employees across all levels effective January 1. It is also giving 100 per cent variable pay, along with a special incentive for junior employees. The company had 2,40,208 employees at the end of September 2020 quarter.
Infosys COO Pravin Rao said the quantum of salary hikes will be identical to those seen in previous years.
The company's results were announced after the closing of trading hours. Shares of Infosys closed at Rs 1,136.10 apiece, down 1.89 per cent from its previous close on BSE.
Sanjeev Hota, Head of Research at Sharekhan by BNP Paribas, said Infosys reported another solid quarter with beat on revenue and margin performance, along with the record-high deal wins ever (including Vanguard deal).
"We also highlight that the company raised its revenue growth guidance to 2-3 per cent in constant currency from 0-2 per cent earlier and surprised with an upgrade of operating margin guidance to 23-24 per cent from 21-23 per cent despite planned wage hike in Q3," he added.
Infosys' result comes a week after larger rival, Tata Consultancy Services had reported a 3 per cent rise in revenue to Rs 40,135 crore for the September quarter. Smaller rival, Wipro's revenue for the September quarter was nearly flat at Rs 15,114.5 crore, while its IT services revenue was up 3.7 per cent at USD 1,992.4 million in the reported period over the June quarter.
HCL Technologies will announce its results on October 16.
Talking about the M&A strategy, Parekh said the company is focussed on strengthening its digital capabilities.
"We are still open to looking at other things as and when they make sense...the businesses that we have acquired will give a boost to our digital capabilities," he added.
In the past few months, Infosys had announced the acquisition of Kaleidoscope Innovation, Guidevision and Blue Acorn iCi.
On the recently announced restrictions on H-1B non-immigrant visa programme in the US, Rao said the company does not see any impact as it has been aggressively hiring local talent laterally as well as from colleges and universities in America.
He added that its localisation in the US market is at 63 per cent and that the company has hired 13,000 locals there in the last three years.
North America accounted for over 60 per cent of its quarterly revenues, followed by 24.3 per cent from Europe, 3 per cent from India and 12 per cent from Rest of the World (RoW).
