March quarter: Infosys reports sedate numbers

Infosys’ ebit margin of 24.5% was lower by 100 basis points sequentially the result of wage hikes while the ebit (earnings before interest and tax) came in at Rs 6,440 crore.

By Srinath Srinivasan

Infosys on Wednesday reported a sedate set of numbers for the March quarter with net profits coming in at Rs 5,076 crore, a decline of 2.4% sequentially and slightly short of analysts’ estimates. Revenues grew 2% sequentially to Rs 26,311 crore, on a constant currency basis, again a shade lower than estimates and much below Tata Consultancy Services’ revenue growth of 4.2%

Infosys’ ebit margin of 24.5% was lower by 100 basis points sequentially the result of wage hikes while the ebit (earnings before interest and tax) came in at Rs 6,440 crore.

The Street should, however, be satisfied with the company’s outlook for FY22. The software services major has guided for a revenue growth of 12-14%, in constant currency terms and for an ebit margin of 22-24%; in FY21, margins came in at 24.5%, up 320 bps with the company deferring some costs.

The deal wins for Infosys in the March quarter were $2.1 billion which was lower than the company’s four-quarter run rate and much smaller than the $9 billion announced by TCS.

Salil Parekh, CEO and MD, said Infosys continues to gain market share and help companies in their digital transformation programmes. Demand from customers, Parekh observed at a press conference, was broad-based and especially strong in the digital, cloud and data segments. “Clients are trusting us to work with them and, given the demand, we believe growth in the digital space will continue”, Parekh said. Large order wins during FY21, the CEO said, had grown 57% to $14.1 billion and while they could be somewhat volatile on a quarterly basis, the pipeline was strong.

Pravin Rao, COO, said the rise in the attrition to 15.2% in the March quarter, from 10%, had been anticipated and was a reflection of the strong demand in the markets. The company, he said was taking steps to retain talent through compensation and measures like promotions and other value propositions. Rao said the attrition levels were expected to remain at these levels for some time. TCS had reported an all-time low attrition for the March quarter. Rao said Infosys added 21,000 freshers during the year and said it was looking forward to hiring similar levels in the current year.