Infosys records bumper Q4, profit rises by 12 percent
BENGALURU: Infosys Ltd projected 13-15% revenue growth for the current fiscal amid strong demand for digital and cloud computing services. However, its March quarter earnings missed analysts’ estimates as wage costs soared.
The revenue growth forecast exceeds our estimates, said Ashis Dash, an analyst at Sharekhan by BNP Paribas. He added that the forecast is also higher than the Bengaluru-based company’s initial 12-14% forecast for the year ended March. Net profit rose 12% to ₹5,686 crore for the quarter ended March from ₹5,076 crore in the year-ago period, trailing Bloomberg’s consensus estimate of ₹5,961 crore.
Revenue rose 22.7% to ₹32,276 crore for the March quarter from ₹26,311 crore in the year-ago period on broad-based growth across business segments, service lines and markets. Revenue was in line with analysts’ estimate of ₹32,709 crore. India’s technology workers are demanding hefty raises and switching jobs at a record pace as the demand for skilled workers to work on digital, cloud computing, and cybersecurity projects soared after the pandemic. Surging inflation is also leading to higher wage costs.
March quarter operating margin narrowed to 21.5% from 24.5% in the year-ago period as employee and compensation costs squeezed profits. The company reported an operating margin of 23.5% in the December quarter. Infosys expects its operating margin to be in the range of 21-23% for FY23.
But the demand environment for software services companies remained strong.
The closely watched dollar revenue grew 20.6% annually in constant currency to $4.28 billion on the back of large deal wins worth $2.3 billion. For FY22, Infosys delivered $16.3 billion in revenue, growing 19.7% in constant currency, the fastest in 11 years. “Infosys delivered highest annual growth in a decade with broad-based performance driven by deeply differentiated digital and Infosys Cobalt-led cloud capabilities, powered by ‘One Infosys’ approach. We continue to gain market share as a result of sustained clients’ confidence in our ability to successfully navigate their digital journeys,” said Salil Parekh, chief executive and managing director. “With the acceleration of digital disruptions, we see immense potential to engage and partner with clients as they transform, adapt and thrive.”
The company’s digital revenues jumped 38.8% in constant currency to $2.53 billion and contributed 59.2% to the total revenue in the March quarter.
The attrition rate rose to 27.7% from 15.2% a year ago and 25.5% in the December quarter.