Infosys Q2 net profit rises 11% as firm raises revenue forecast, to buyback shares worth ₹9,300 crore

Infosy on Thursday raised the lower end of its full-year revenue guidance citing a strong demand pipeline, after the software services provider reported second-quarter net profit rose 11.1% to ₹6,021 crore.

The company said FY23 revenue would grow 15-16%, compared with the earlier projected 14-16%.

Salil Parekh, CEO and MD, said that while concerns around the economic outlook persisted, the demand pipeline was strong as clients remained confident in the firm’s ability to deliver the value they sought, both on the growth and efficiency of their businesses. He was addressing analysts in the earnings call.

“This is reflected in our revised revenue guidance of 15%-16% for FY 23,” he said.

Infosys reported a 11.1% growth in its second quarter net profit of Rs 6,021 crore as against Rs 5,421 core reported in the corresponding quarter a year ago.

Revenue expanded 23.4% to ₹36,538 crore compared with a year earlier. In constant currency terms, revenue grew 4% over the previous quarter to $4.55 billion. Digital revenues accounted for 61.8% of the total, while increasing 31.2%. Revenue from the cloud segment crossed $1 billion in the quarter.

Mr. Parekh said total contract value for large deals at $2.7 billion was the highest in the last seven quarters, despite some ‘softness in demand. “Our strong large deal wins and steady all-round growth in Q2 reflect the deep relevance and differentiation of our digital and cloud solutions.”

Operating margin improved 140 basis points to 21.5% compared with the previous quarter on the back of a depreciating rupee and other cost optimisation moves. However, the tech firm revised the operating margin guidance downwards owing to cost pressures and now expects a margin range of 21-22% as against 21-23% earlier.

Chief Financial Officer Nilanjan Roy said, “We expect our margins to improve in the second half as attrition comes down.”

Attrition inching down

Quarterly attrition had been declining in the last three quarters in a row, he pointed out. In Q2, attrition came down to 27.1% from the previous quarter.

“To control attrition, we have taken several initiatives including introducing a well-defined career path for employees, leadership development and skilling programmes in association with global universities. A combination of all these has worked in the last three quarters,” explained Mr. Parekh.

Onboarded 40,000 freshers in H1

Infosys said it had onboarded 40,000 freshers, of its total fresher hiring plan of 50,000 for the full fiscal. These recruits were in various stages of training. In Q2, it reported net hiring of 10,032 people to take its headcount to 345,218, executives said.

Infosys also announced a ₹9,300-crore share buyback scheme through the open market route. The shares will be bought back at a price not exceeding ₹1,850 per share. The company’s shares fell 0.6% to ₹1,419.75 on the BSE. The firm also announced an interim dividend of ₹16.50 per share.

Responding to a query on moonlighting, Mr. Parekh said Infosys would support the aspirations of its employees who want to learn from opportunities around gig work. “We are developing more policies to accommodate their aspirations while respecting the confidentiality of the employment contract. However, we will not allow dual employment. If any blatant violation is spotted we will let such people go.”