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Infosys announces the fastest increase in first-quarter sales in a decade, as well as a 23 percent increase in net profit

Infosys announced a consolidated net profit of Rs 5,195 crore in the first quarter of fiscal 2022, up 2.34 percent from Rs 5,076 crore the previous quarter.

In currency terms, revenue grew 6% to Rs 27,896 crore from Rs 26,311 crore in the previous quarter. 

In dollar terms, the topline increased by 4.7 percent to $3,782 million, surpassing expectations of Rs 27,718 crore and $3,758 million for the quarter.

On a sequential basis, sales increased by 4.8 percent in constant currency.

The digital business grew 9.7% sequentially to $2,040 million, but the core business fell 0.7 percent QoQ to $1,742 million in the second quarter of 2021.

As of June 2021, the overall contribution of digital business to revenue has risen to 53.9 percent, up from 51.5 percent in March 2021.

The business reported in an exchange filing that big deal volumes were robust in Q1, with a total contract value of $2.6 billion.

Infosys raised its revenue growth forecast for FY22 to 14-16 percent from 12-14 percent before, while maintaining its full-year EBIT margin forecast of 22-24 percent.

“We grew at the fastest pace in Q1 in a decade, at 16.9% year-on-year and 4.8% quarter-on-quarter in constant currency. This gives us confidence to increase our revenue growth guidance to 14%-16%,” said Salil Parekh, CEO and MD, Infosys.

EBIT climbed 2.5 percent to Rs 6,603 crore from Rs 6,440 crore in the previous quarter, but EBIT margin fell 80 basis points to 23.7 percent from 24.5 percent.

Infosys’ operational performance fell short of expectations. EBIT was projected to be Rs 6,787 crore, with a 24.5 percent EBIT margin.

“We remain confident of delivering on the margin guidance, underpinned by our comprehensive cost optimization program, despite increasing cost headwinds arising largely from compensation review, talent acquisition and retention”, said Nilanjan Roy, Chief Financial Officer, Infosys.

“Our free cash conversion was strong at 122.3% of net profit and ROE improved to 29.3%”, he added.

Employee expenditures such as retention reduced the company’s profits. Infosys said that it will expand its employment of freshers and that it has already hired over 10,000 freshers this quarter.

“As the demand for digital talent explodes, rising attrition in the industry poses a near-term challenge. We plan to meet this demand by expanding our hiring program of college graduates for FY 22 to 35,000 globally,” said Pravin Rao, Chief Operating Officer, Infosys.

On the BSE, Infosys shares closed 2.07% higher at Rs 1,576.90 each on Wednesday.

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