India’s second-largest information technology (IT) company Infosys on Wednesday set an encouraging growth momentum for the rest of the fiscal year. The IT major raised its annual revenue growth guidance in constant currency backed by robust June quarter earnings, large deal wins, and a strong pipeline.
The Bengaluru-based IT firm posted a consolidated net profit of ₹5,195 crore, recording a jump of 22.7% year-on-year for the first quarter ended June 2021, while quarter-on-quarter profit rose to 2.3% on revenue of ₹27,896 crore, up 18% year-on-year and 6% quarter-on-quarter.
In dollar terms, the IT firm’s revenue for the April-June period stood at $3.78 billion, up 4.7% quarter-on-quarter and 21.2% year-on-year. Revenue growth in constant currency terms, grew by 4.8% quarter-on-quarter and 16.9%, year-on-year. Indian software-services companies typically use the constant currency method to eliminate the effects of exchange rate fluctuations while calculating financial results.
“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, in a statement. Parekh, while addressing a virtual press conference, pointed out that the company's robust Q1 earnings, large deal wins during the quarter, and a strong deal pipeline led to the upward revision in the revenue guidance.
Infosys earlier projected revenue growth guidance of 12%-14% in constant currency for FY22. The IT firm, however, retained its full year operating margin forecast at 22%-24% percent. Operating margin in the June quarter stood at 23.7%.
The management pointed out that Infosys had a strong flow of large deals during the first quarter of the current fiscal with total contract value (TCV) of $2.6 billion. According to Infosys, large deals are over $50 million in value. April-June is typically a seasonally strong quarter when client budget for technology spend starts rolling out.
During the quarter, the IT major’s digital business grew by 42% year-on-year, currently contributing 53.9% of its total revenue. “We recorded broadband growth across all our sectors and service lines and geographies,” noted Parekh. The financial services business grew by 22.6% during the quarter followed by retail (22%) and life sciences verticals (21%) year-on-year. The North America region which contributes nearly 62% to the IT firm’s overall revenue grew by 21% during the April-June period, signalling strong recovery since the Covid-19 pandemic struck last year.
During the quarter, Infosys had a net headcount increase of 8000 people, thereby taking its total employee base to 2,67,953, as of June 30, 2021.
“We rolled out several intense employee engagement initiatives, including career acceleration opportunities, compensation reviews, and learning and development interventions,” said Pravin Rao, chief operating officer, Infosys in a statement, adding that, “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 programme of college graduates for FY22 to approximately 35,000 globally.”
Shares of Infosys closed at ₹1576.90 a piece, up 2.07% on the BSE on Wednesday. The sensitive index, Sensex, ended the day marginally up by 0.25%.