Infy posts 11% rise in Q2 net at Rs. 6,021 cr

Strong Deal Pipeline

- Bags large deals worth $2.7 bn in Q2

- Posts highest large deal wins in last 7 qtrs

- Expects margin to improve further in H2

- Will buy back shares via open market route

- Buyback price is Rs1,850 per share as against closing price of Rs1,419.75 on Thu

Bengaluru: Infosys posted a strong performance for the second quarter with an optimistic outlook on revenues for ongoing fiscal year though operating margin guidance was tampered down.

India's second largest IT services firm, which outperformed rivals TCS and Wipro in revenue growth term on the back of large deal wins, also announced plans to buy back shares worth Rs 9,300 crore through open market route.

Infosys posted a net profit of Rs 6,021 in Q2, a rise of 11 per cent from Rs 5,421 core reported in the same quarter of the previous year. Revenue rose to Rs 36,538 crore, clocking a 23.4 per cent growth over the same period last year. In constant currency term, revenue grew by 4 per cent over the previous quarter to $4.55 billion.

The company had the highest large deal wins in last seven quarters worth $2.7 billion. It maintained that despite some softness in demand, company's deal pipeline remained robust.

On the back of sound large deal pipeline, the company raised the lower end of its revenue guidance to 15-16 per cent for FY23 as compared to 14-16 per cent earlier.

"While concerns around the economic outlook persist, our demand pipeline is strong. Along with digital side of business, even we have seen improvement in our core business during this quarter. Also, revenue from our cloud segment has now reached more than $1 billion. Keeping in mind the large deal momentum and macro factors, we narrowed our revenue guidance to 15-16 per cent," said CEO & MD of Infosys, Salil Parekh.

Operating margin of the company improved to 21.5 per cent, a rise of 140 basis points over the last quarter on the back of rupee fall and several cost optimization moves. However, Infosys revised the margin guidance downward owing to cost pressure and now expects a margin range of 21-22 per cent as compared to 21-23 per cent earlier.

"We expect our margins to improve in the second half as attrition comes down. We are also going back to clients in multiple cases for raising prices as part of our contracts and our differentiated offerings," Nilanjan Roy, Chief Financial Officer of Infosys.

Despite slowdown fears, all of its verticals grew in double digit YoY basis in the second quarter. The company, however, said that telecom and hitech are showing slowdown in large deal terms.

In attrition front, the company saw its employee churn coming down by 1.3 per cent over the last quarter to 27.1 per cent in Q2 of FY23. "We are seeing attrition coming down for three quarters in a row. My sense is that it will come down further," said Pareekh.

Infosys added 10,032 employees on net basis to take its total headcount to 345,218 by the end of September quarter. The company, which has already hired 40,000 freshers till now, will take this to 50,000 or more for the whole fiscal year. On the issue of moonlighting, the management said that while it supports various gig works inside the company, it is against dual employment.

"We support the aspirations of our employees to learn beyond their work. We will support them to work on certain gig projects after prior approval of the managers. We are also developing more comprehensive policies for that, while ensuring contractual and confidentiality commitments are fully respected,; the company said.

As its one-year cooling-off period ends, Infosys announced a Rs 9,300 crore share buyback scheme through the open market route. The shares will be bought back at a price not exceeding Rs1,850 per share. Infosys share prices were at Rs 1,419.75 on BSE on Thursday. It also announced an interim dividend of Rs 16.5 per share.

While concerns around the economic outlook persist, our demand pipeline is strong. Along with digital side of business, even we have seen improvement in our core business during this quarter. Also, revenue from our cloud segment has now reached more than $1 bn. Keeping in mind the large deal momentum and macro factors, we narrowed our revenue guidance to 15-16%

- Salil Parekh, CEO & MD, Infosys