Profit surges 23%; signs 22 large deals; ups FY22 revenue guidance to 14-16%
IT services giant Infosys has raised its revenue guidance on the back of what it termed its best performance in the last decade thanks to significant deal wins and robust revenue growth in the first quarter of 2021-22.
While the net profit rose 22.7 per cent year-on-year to ₹5,195 crores in the first quarter of FY22 compared with the same period last year, revenues grew 17.9 per cent to ₹27,896 crores. On a subsequent basis, the net profit grew 2.3 per cent, a tad below street expectation, and revenues rose 6 per cent.
Infosys raised its revenue guidance for the current fiscal to 14-16 per cent but retained the margin guidance at 22 -24 per cent.
To hire 35,000 freshers.
The IT major said that it expects to hire 35,000 fresh graduates through the year and has already brought in 10,000 in the first quarter. Its attrition level rose to 13.9 per cent in the reporting quarter compared with 10.9 per cent the previous quarter. The firm said that while it was an area of concern, it also reflects strong industry demand.
The Bengaluru-headquartered company won deals worth $2.6 billion in the first quarter.
“We grew at a very faster pace in Q1 in a decade, at 4.8 per cent quarter-on-quarter and 16.9 per cent year-on-year in constant currency,” said Mr Salil Parekh, CEO and MD.
Asked if the current pace of growth is sustainable over a more extended period, Mr Parekh said the overall demand outlook was strong. “We feel comfortable this will continue. The guidance is for the current financial year, and the overall increase in the digital transformation space is quite remarkable,” he pointed out.
Infosys reported 42.1 per cent growth (YoY) in its digital revenues in the first quarter. “We had a strong quarter as far as large deals are concerned. We signed 22 large deals in the first quarter, out of which nine were in BFSI vertical while the remaining came from retail, manufacturing and other segments. Of the total deals, 30 per cent were not new,” said Mr Pravin Rao, Chief Operating Officer, in his earning commentary.
Infosys’ operating margin dipped 80 basis points to 23.7 per cent in the first quarter on wage hikes, Covid relief for employees and other expenses, said the company. Mr Nilanjan Roy, Chief Financial Officer, said: “We remain confident of delivering on the margin guidance, underpinned by our comprehensive cost optimisation programme, despite increasing cost headwinds arising largely from compensation review, talent acquisition and retention.”
On the issue of glitches in the ITR e-filing portal, Parekh said Infosys is focused on “expeditiously” resolving issues and termed it the “single largest priority” at the moment.